Commerce Commission warns Foodstuffs North Island for ‘likely’ breaking competition law

The Commerce Commission says Foodstuffs North Island were uncooperative and unreasonable in their dealings with a supplier. Photo / 123RF

The Commerce Commission has issued a warning to Foodstuffs North Island for their treatment of a supplier that likely breached grocery competition law.

Grocery Commissioner Pierre van Heerden said Foodstuffs North Island appeared to have obstructed and delayed a supplier request by acting in ways that were uncooperative and unreasonable.

“We believe that Foodstuffs North Island likely breached a fundamental aspect of the Supply Code which is that retailers deal with suppliers in good faith at all times,” van Heerden said.

A Category Manager at Foodstuffs North Island, who acted as the main point of contact for the supplier, was also investigated regarding their role in the matter.

A spokesperson for Foodstuffs North Island said: “We take our obligations under the Grocery Supply Code seriously and are committed to maintaining fair and constructive relationships with our suppliers.

“Since the introduction of the Code, we’ve implemented a comprehensive programme of training and support for our team, including dedicated intranet resources, regular drop-in sessions for commercial staff, and mandatory training modules.

“We’ll continue to work with the Commission to ensure our people understand and uphold the standards expected.”

Van Heerden said based on evidence available, they decided a warning was the right response.

Only a Court can determine if there has been a breach of the Grocery Industry Competition Act 2023.

“I’m concerned that this follows a pattern of behaviour that has been present in the industry for decades,” van Heerden said.

“This behaviour has been enabled for so long due to the significant power imbalance between the major supermarkets, who hold the vast majority of the market, and suppliers, who have limited bargaining power in comparison.”

Van Heerden said major supermarkets have a responsibility to make sure their staff are properly trained.

“Suppliers are reliant on their relationships with the retailers’ commercial teams, so the staff in these roles within the supermarkets hold a lot of power,” he said.

“Any behaviour that weaponises this power imbalance is unacceptable.

“[Supermarkets] need to make sure their staff follow the rules and deal with suppliers in good faith.”

Foodstuffs operates New World, Pak’nSave and Four Square stores.

In August last year, Foodstuffs North Island was fined $3.25 million for imposing anti-competitive land covenants to try to block competition in the lower North Island.

The fine was the biggest imposed for anti-competitive land covenants.