In the Act, harm is defined as “any crime, damage, death, disease, disorderly behaviour, illness, or injury” associated with excessive or inappropriate consumption of alcohol.
“Given the evidence as a whole, it might be thought to be clear beyond argument that there was such a reasonable possibility or likelihood of the closing hours restriction reducing alcohol-related harm,” the judgment read.
Woolworths and Foodstuffs were ordered to pay $35,000 to Auckland Council.
DLA Piper represented Foodstuffs, The Environmental Lawyers represented Woolworths, and Simpson Grierson represented Auckland Council.
For context, a complex, seven-day High Court trail was estimated to cost at least $348,885 in legal and court fees back in 2017. What I would give to learn the total cost in this eight-year legal battle, I don’t know. But I digress.
Time is of the essence
The timing is suitable seeing as the Grocery Industry Competition Bill had its second reading in Parliament on May 2.
Introduced in November last year, the bill aims to increase competition and productivity in the grocery market. The bill also pledges to introduce a grocery supply code to promote fair conduct between regulated retailers and suppliers, and to allow the Commerce Commission to monitor and regulate the sector.
The legislation follows the Commerce Commission’s mammoth market study into the retail grocery sector released last year. In the year to September 2021, more than $22 billion was spent at supermarkets and grocery stores.
In the year to June 2019, food was the second largest expense for New Zealand households, with an average spend of $234 a week.
Citing a failure in the market, the Commerce Commission recommended improving conditions for entry and expansion, improving competition for the acquisition of groceries, improving consumers’ ability to make informed decisions, and ongoing monitoring and enforcement of competition issues in the sector.
Two months later, Commerce and Consumers Affairs minister David Clark officially put supermarkets on notice, accepting 12 of the 14 recommendations.
“Our supermarkets know they’re in the spotlight, and we’ve recently seen some posturing around price rollbacks. However, it doesn’t fix the systemic problem at large – which is a lack of genuine competition in the sector,” he said.
How did we get here?
Arguably the ‘duopoly’ was born out of an appeal to the Privy Council in 2002. In 2001, Progressive Enterprises sought clearance from the Commerce Commission to acquire Woolworths, a day shy of the Commerce Amendment Act 2001 coming into force.
The legislation aimed to “promote competition in markets for the long-term benefit of consumers in New Zealand”.
It also imposed a new test where “a person must not acquire assets of a business or shares if the acquisition would have, or would be likely to have, the effect of substantially lessening competition in a market”.
Previously, acquisitions were only prohibited if businesses passed a market dominance test. While the acquisition was still under consideration, the new statutory test prompted rival Foodstuffs to apply to the High Court.
The High Court rejected Foodstuffs’ contention the new test applied, citing Progressive’s application had been made prior to the legislative changes. Ipso facto, the acquisition went ahead.
Foodstuffs appealed to the Court of Appeal, ruling the new test should have been applied by the Commerce Commission. The acquisition was then reneged. On appeal to the Privy Council, Progressive came out on top on the basis of a legal technicality. And so it was.
Interestingly, the Commerce Amendment Act 2001′s explanatory note clarified competition was not an end in itself but a means to promote the long-term benefit of consumers as a whole. Twenty-two years later, we can see the Act failed on that front.
The gift of hindsight is a cruel beast.
If anything these cases bring to light the limitations of New Zealand’s constitutional system - be it too slow, too reactive, or too narrow in its focus.
