Van Heerden also wants to require retailers to reimburse suppliers if they buy groceries at promotional prices, but then sell those products at higher prices after the sale period ends and make sure retailers keep records on how they’re complying with certain parts of the code.
Supermarkets would also be prohibited from retaliating against suppliers that exercise their rights under the code.
The issue over the power imbalance between the big supermarkets and suppliers is nothing new.
The supplier code has been in place since November 2022 but a survey of suppliers last year found that while most suppliers were aware of the code, their understanding of it remains limited.
The survey also found nearly all suppliers encountered challenges in their relationships with regulated grocery retailers over the past year.
Larger suppliers more frequently reported addressing issues with retailers compared to smaller suppliers, but their satisfaction with the resolution process remained low.
The commission will now consult on the proposed changes and then issue a final report in September.
Its wholesale supply inquiry is not due to be completed until 2026.
That will be four years after it released its market study into the retail grocery sector which found competition in the sector is “not working well”.
The supermarkets have been “on notice” since then.
In March, Finance Minister Nicola Willis said she was considering a possible breakup of New Zealand’s duopoly.
She laid down a Request for Information to speed up the improvement of competition in the retail grocery sector.
Officials are now wading through those submissions.
But despite the pressure from the Government and the regulator, little seems to have changed in the sector.
This week Woolworths apologised and blamed “human error” for advertising incorrect prices for its Milkrun delivery service.
The supermarket giant is already facing criminal charges for misleading consumers over pricing.
The incorrect pricing included butter being marketed for $5.50 when it was actually $9.55.
The commission is now assessing complaints made about the incorrect advertising.
Consumers deserve better. Food prices remain high and have been marching upwards again of late.
Food prices increased 3.7% in the 12 months to April – well ahead of the annual inflation rate at 2.6%.
Consumer NZ chief executive Jon Duffy says the commission needs to come down harder on the sector.
He told the Herald this week: “These problems were all identified in the Commerce Commission’s supermarket market study in 2022, and supermarkets have been on notice since then, but have not voluntarily addressed these issues".
“Given that we have had three years of inaction, we’re disappointed that the commission isn’t taking more decisive action at this time.
“This is an urgent issue, but it seems as though we’re just kicking the can down the road,” Duffy added.
The major supermarkets insist they are focused on the issues.
Woolworths New Zealand interim managing director Pieter de Wet said this week: “We know New Zealanders are facing cost of living pressures and our absolute priority is delivering great products, great prices and a fantastic shopping experience for our customers as well as building a meaningful wholesale business.”
Foodstuffs North Island said it took its obligations under the grocery supplier code seriously.
“Any supplier who has an issue should raise it through the appropriate channel – either with us directly or through the Commerce Commission.”
There’s been enough consultation and rhetoric.
Both the commission and the Government need to take action now to help both the consumer and suppliers get a better deal.
