The Commerce Commission reminds grocery suppliers that requiring retailers to charge above minimum prices for their goods can breach the Commerce Act.
Commerce Commission Chair, John Small, said that the practice could hit New Zealanders in the pocket as it could prevent retailers from offering lower prices to compete for customers.
The Commission’s advice follows an investigation into instances of resale price maintenance uncovered during the Commission’s market study into the retail grocery sector.
“Kiwi consumers and retailers lose out when suppliers set minimum prices for their goods. It makes it hard for new retailers who want to compete on price to enter the market. Without that genuine competition, consumers miss out,” said Small.
The Grocery Industry Competition Act, which came into force on 10 July 2023, gives the Commerce Commission new powers to monitor and regulate the grocery sector. The new function headed by the Grocery Commissioner will see a Grocery Supply Code to address the imbalance in power between retailers and suppliers and a dispute resolution scheme for suppliers and wholesale customers of the major grocery retailers.
“These measures will give confidence to suppliers negotiating with retailers and new and existing retailers looking to enter into supply agreements. This will improve competition and efficiency in the grocery sector, benefiting all New Zealanders.”
The Commission’s investigation into resale price maintenance found that three grocery suppliers set minimum prices for their goods in their dealings with now-defunct retailer The Honest Grocer. The Commission has sent Compliance Advice Letters to all three suppliers to remind them that this conduct can breach the Commerce Act.
