The select committee considering the Grocery Industry Competition Bill has made public the submissions it received on the bill.

FGC was one of the 29 submissions, which also included Woolworths NZ, the Commerce Commission, Consumer NZ, Night ‘n Day, The Warehouse Group, and Horticulture NZ. No submission from Foodstuffs NZ has been published.

In our submission, we said we were broadly supportive of the provisions in the bill, including:

  • The functions for the Commerce Commission, especially investigation and enforcement to provide a strong signal of intent to act should expected competition not emerge
  • specification of the ‘regulated grocery retailers’ named in the Bill and others able to be ‘designated’ by Order in Council in the future
  • making of the grocery supply code and its review within 2 years of operation
  • arrangements for a wholesale regime including reporting and examination/due process before further intervention is undertaken, a ‘wholesale code’ and the reserve powers that could split the major supermarket business units
  • the strong enforcement powers and penalties
  • a dispute resolution scheme
  • the establishment of an independent Grocery Commissioner
  • extensive investigation and information gathering powers and related offences
  • a facility for collective bargaining being available for grocery suppliers
  • disclosure statements to support the Commission monitoring competition and efficiency in the grocery industry
  • provision for the application of secondary legislation made under the Bill to apply to pre-existing agreements at the time secondary legislation commences

In addition, we noted the bill addresses the imbalance in negotiating power in three ways:

  • creation of a grocery supply code
  • extension of protections in the Fair Trading Act 1986 against the use of unfair contract terms
  • provision for collective bargaining

“We consider these to be imperative for future fairness between suppliers and grocery retailers and strongly support their inclusion in the bill.”

There were “a very few areas” where we suggested change or caution. These included:

  • in relation to review of the Code, we proposed a review be required “within one month after the first year’s operation” (and not after two year’s operation). This will ensure that any unintended consequences can be addressed swiftly and not get ‘baked in’ to the system and it would identify major issues with set up and early operation
  • we believed it would be constructive to mandate a further review of the Code after 5 years and thereafter at the Minister’s discretion to report on the Code’s durability and effectiveness for the longer term
  • we were concerned the wholesale system not create a wholesale duopoly that mirrored the retail duopoly. This would be of no benefit to suppliers or consumers. We were concerned to ensure suppliers maintained the ability to choose whether to supply to retailers on a wholesale basis or on a retail basis only. We suggested two alternative amendments for this purpose.
  • that accessibility to the dispute resolution processes for small to medium size suppliers is facilitated so there is the ability for a full range of concerns to be able to be worked through at low cost
  • the Commission’s annual report on the grocery industry must report on the veracity of the retailer profitability analysis and suggested excess profits. Requiring the annual report to report on retailer profitability would be an ongoing mechanism to monitor any “super profit making” in the New Zealand market.

Read FGC’s submission here

Read other submissions here