FGC's response to Commerce Commission report

Press Release 20 November 2014

The Food & Grocery Council is not surprised by the Commerce Commission’s findings, given New Zealand’s current legal framework, says Chief Executive Katherine Rich.

We stand by our statements, based on information received from members earlier this year, that Countdown did ask some suppliers for payments related to trading in previous periods. 

It’s important to emphasise that while the Commission has concluded there were no technical breaches of any law, that doesn’t mean business behaviour that New Zealanders would deem unfair has not occurred.  The fact that there were 90 official complaints to the Commission speaks volumes.

The Commission’s Chief Executive acknowledged as much today when he said he wasn’t saying there was nothing to the 90 complaints, “What I’m saying is there was evidence produced, [but] that evidence did not suggest a breach of the [Fair Trading Act and the Commerce Act]”.

With just two supermarket chains, New Zealand has the highest concentration of supermarkets in the world.  That means that for most of our members the vast majority of their revenue comes from just two customers.

This privileged dominant position comes with responsibilities to ensure that such buyer power is not abused, either in the treatment of suppliers or to the detriment of the New Zealand food industry and consumers. Abuse of buyer power can lead to higher prices and less choice as smaller suppliers disappear. 

Our members know full well that our sector is not for the faint-hearted. But they also firmly believe that robust negotiations which deliver good grocery savings for Kiwis and fair treatment of suppliers are not mutually exclusive.

Compared to the supermarkets, FGC is a minnow, but it’s our role as the industry association for food and grocery manufacturers in New Zealand to raise issues on behalf of members without fear or favour. 

Discussions in the wake of this report will naturally turn to whether New Zealand should follow Australia, the United Kingdom, and other international markets to consider a legislated grocery code of conduct, or whether New Zealand should consider laws that deal with unconscionable dealings, to mirror what is happening in Australia.  It's those laws that are being used to prosecute similar behaviour in Australia.

FGC would support a code of conduct if it led to more positive business relationships.

You can read the Commerce Commission's full report here.