Bid to curb supermarket power

Photo / Dean Purcell

Green MP Sue Kedgley is pushing for a law to rein in the power of New Zealand's supermarket chains, which she says poses a threat to suppliers and consumers.

Kedgley has drafted a member's bill, which she hopes will be chosen in a ballot tomorrow, aiming to "regulate grocery supply practices and promote fair trade".

It states that New Zealand's two supermarket chains - Progressive Enterprises and Foodstuffs - control 95 per cent of this country's grocery market.

"The market has become so consolidated and the buying power of supermarkets so extensive that supermarkets are able to dictate terms and conditions to suppliers," the bill says.

"This poses a risk to long-term consumer interests, as well as to suppliers, in particular to small scale suppliers and growers."

It sets out terms and conditions for contracts between supermarkets and the companies that supply them.

Provisions that suppliers are not threatened with loss of business for supplying other firms are included.

Additionally, the Commerce (Code of Practice for Supermarket Suppliers) Amendment Bill requires that a "supermarket adjudicator" be established once the the code is in place, with responsibility for implementing its rules and resolving disputes.

"If small suppliers are forced out of business by anti-competitive practices this will have a detrimental on consumer choice, and on competition in the sector," the bill says.

The bill is modelled on the UK's Groceries Supply Code of Practice, introduced in February, which aims to reduce a power imbalance that favours British supermarket chains, to the detriment of suppliers.

Kedgley said she was prompted to draft her bill after conducting a survey of fruit and vegetable growers in July, which found supermarkets were applying mark-ups of up to 500 per cent on fresh produce.

Horticulture New Zealand spokeswoman Leigh Catley said the organisation, which represents fruit and vegetable growers, supported the bill.

There was a lack of transparency around the prices supermarkets were charging for fruit and vegetables, she said.

Catley said: "Growers see the product leave the orchard or farm gate and then they see the pricing in supermarkets and they don't know how it got there."

Although Kedgley was prompted to draft the bill by the experiences of fruit and vegetable growers, she said all suppliers would benefit from it, including food manufacturers.

Katherine Rich, chief executive of the Food & Grocery Council (FGC), which represents manufacturers, said Kedgley had raised an important debate.

"It does seek to address unfair treatment that we do get reports of," Rich said. "However, [unfair treatment] is not widespread."

She said the bill would be circulated among FGC members, seeking their feedback.

Foodstuffs (NZ) managing director Steve Anderson said the firm, which operates Pak'n Save, Four Square and New World supermarkets, did not "support the burdening of New Zealand retailers with further regulation or legislation".

"We are already well down the track with developing our own code of conduct and strongly support this course of action rather than adding unnecessary red tape and bureaucracy, which could only add costs to shoppers," Anderson said.

A spokesperson for Progressive Enterprises, which owns Countdown, Foodtown and Woolworths stores, was not available for comment.

Members' bills that are successful in a ballot will go on to become available for the House to consider on the following members' day.