Last month, the Commerce Commission announced the appointment of Pierre van Heerden as the Grocery Commissioner, more than a year after former Commerce and Consumer Affairs Minister David Clark announced the new role.
It was part of a suite of changes promising to resolve issues highlighted in the Commerce Commission’s market study into the $22 billion grocery sector.
We’ve since seen the introduction of the Grocery Industry Competition Act, which designates Foodstuffs North and South Island and Woolworths New Zealand as regulated grocery retailers.
With the regulator watchdog now in full flight, the companies are required to consider requests from other retailers for wholesale supply in good faith and to follow the imminent Grocery Supply Code in their contractual dealings with suppliers.
In a statement, Commerce Commission chair John Small said the scrutiny had resulted in positive changes, with the duopoly having relinquished restrictive lease covenants that “posed a considerable obstacle to other retailers developing or expanding their grocery offering to consumers”.
Small jumped the gun on that one, with Consumer NZ lodging a complaint alleging breaches of the Fair Trading Act earlier this month.
As part of the non-profit’s campaign to “end dodgy specials”, it received 80 examples of problematic pricing claims across the duopoly in June. The complaints included 50 claims of misleading pricing; 18 concerning supermarkets charging more than advertised, 11 multi-buy examples, and 21 specials that weren’t on special.
Between September last year and June this year, Consumer NZ received 602 complaints from disgruntled shoppers. Data also suggested trust in supermarkets had declined by 42 per cent since June 2021.
Fair Trading Act
Cue the Fair Trading Act (FTA), which aims to promote fair competition, product safety, and for consumers to rely on accurate information before buying products and services.
It covers commercial activities, trades, professions, businesses, oversees suppliers of goods, services, and interests in land in New Zealand, and online sales.
The 1986 piece of legislation prohibits misleading and deceptive conduct, unsubstantiated claims, false representations, unfair terms in standard consumer contracts, and specific unfair practices.
In the context of an advertised angora sweater that’s on sale, locally-made and that comes with a free baby lamb, breaches would occur if the sweater had a poly-blend, was made in Australia, was not actually on sale and excludes GST, and buyers walk away baby lamb-less.
Suppose the sweater spontaneously combusts, this safety issue would fall under the Ministry of Business, Innovation and Employment.
While the Consumer Guarantees Act covers the quality of goods and services after purchase, the Fair Trading Act covers all aspects of the promotion and sale of goods and services, be it advertising, pricing, sales techniques, and financing.
Consumers can go to the Disputes Tribunal or District Court, which could enforce damages, and enforce refunds, repairs, or the altering of contracts.
Although the Commerce Commission is tasked with enforcing the Fair Trading Act, it can’t represent consumers. Instead, it will act on complaints by investigating traders, issuing warnings, and commencing court proceedings.
This was the case in 2020, when the Commerce Commission took on Kennedy’s Foodcentre (better known as Pak’nSave Māngere) following discrepancies between advertised promotional prices and those charged at the till.
Under the franchise arrangement, each Pak’nSave is individually owned and Kennedy’s Foodcentre had an annual turnover of $55 million in 2018, the judgment read. In August 2019, the company had an average of 3203 customers per day, with a daily average spend of $58.58 on 11.5 items (including GST).
After a series of complaints, the Commerce Commission undertook a series of mystery shops and purchased products advertised as on special either online or in store. Discrepancies were raised with customer service and over-charges totalled $20.99.
The company was fined $78,000 for six charges of making false and misleading representations about price under the Fair Trading Act.
The question remains, will we be seeing more court proceedings now that we’ve got a grocery commissioner? Or better yet, it will be interesting to see whether consumers better utilise their rights under the Fair Trading Act, which arguably haven’t changed since 1986.
Sasha Borissenko is a freelance journalist who has reported extensively on the legal industry.