Woolworths New Zealand has breached the Grocery Industry Competition Act, according to the Commerce Commission.
The Commerce Commission has warned Woolworths New Zealand for what it believed was a breach of the Grocery Industry Competition Act following a review of the major supermarkets’ delisting processes.
“The possibility of products being removed from shelves is a significant weight on suppliers that can reinforce the power imbalance between major supermarkets and smaller suppliers,” Commerce Commission Head of Groceries Alice Hume said.
“Woolworths, Foodstuffs North Island, and Foodstuffs South Island hold 82 percent of the grocery market in New Zealand and so are the main avenue for most suppliers to sell products. Losing access to such a large portion of the market can effectively signal the end of a smaller supplier.”
Dr Hume added that the risk of losing market access can lead to suppliers accepting conditions that aren’t beneficial to them, and a lack of trust about how supermarkets make these decisions.
“We’ve heard concerns directly from suppliers about the ongoing power imbalance and the major supermarkets’ processes when delisting products.”
The Grocery Supply Code (the Code) places obligations on the major supermarkets when undertaking range reviews to decide which products are stocked. As part of these reviews, products may be ‘delisted’ as the supermarket chooses to no longer stock them.
The newly outlined process gives suppliers clearer rights to challenge delisting decisions and more transparency through their interactions with the major supermarkets. Any breaches of the Code are breaches of the Grocery Industry Competition Act.
The Commission reviewed the range review processes of all the major supermarkets to make sure they were meeting their obligations under the Code. Through this process, it identified and investigated instances where it considered Woolworths New Zealand was at risk of not meeting its obligations. After this investigation, the Commission issued Woolworths New Zealand with a Warning for what it believed was a likely breach of the Grocery Industry Competition Act, noting that only a court can determine if a breach has occurred. Woolworths has since updated its processes to meet its obligations.
“The Code plays a crucial role in levelling the playing field between the major supermarkets and smaller suppliers, so we take compliance very seriously,” Dr Hume added.
“We’ve recently reviewed and updated the Code to make sure that suppliers are protected from retaliation when they raise concerns about or challenge the major supermarkets on their compliance with the Code.”
Dr Hume said range reviews continue to be an area of focus for the Commission, with previous and ongoing investigations.
“We ask suppliers to come forward if they have any concerns around delisting or any other potentially unfair treatment from major supermarkets. You can contact the Commission directly, or through the anonymous reporting tool on our website.”
More news here.
