The New Zealand Food & Grocery Council welcomes the Commerce Commission’s draft report on its market study into the grocery sector.
“This is a most thorough report that delves very deeply into all the market and competition issues concerning consumers,
retailers and suppliers,” says Chief Executive Katherine Rich.
“The Commission has left no stone unturned and has compiled a meticulous and accurate reflection of the grocery market.
“The report shows there are big problems in the market, and consumers would get better prices, wider ranges, and better
quality if there was increased competition.
“It accurately reflects the reality faced by many suppliers of food and grocery products to the two supermarket chains
around the imbalance of power in negotiations on issues such as price, promotions, and discounts.
“The Commission’s finding that competition in the wholesale purchasing of groceries is not working well for many
suppliers, and that being reliant on just two major retailers has allowed the retailers to push excess costs, risks, and
uncertainty onto suppliers, with fears of delisting if they do not agree to their terms, vindicates the Food & Grocery Council’s stance.
“It also identifies the lack of competition is having a negative effect on the range of products available, the
innovation open to manufacturers, and investment in the industry.
“We are heartened by the Commission pointing to two options to strengthen supplier bargaining power: a mandatory
industry Code of Conduct and allowing suppliers to bargain collectively.
“We were particularly pleased the Commission concluded it would be beneficial to introduce of a mandatory code of
conduct to strengthen bargaining power and prevent current conduct which reduces the ability and incentive of suppliers
to invest and innovate.
“This is exactly what is needed to give suppliers something closer to a level playing field when it comes to
negotiations.
“The Food & Grocery Council has been advocating strongly for these for some years, and we currently have a petition before a
Parliament Select Committee calling for a mandatory code of conduct.
“Everyone benefits from a flourishing food industry where suppliers have a genuine chance to negotiate and receive fair
terms, and which ultimately benefits consumers in terms of innovation and range.
“The Food & Grocery Council looks forward to working constructively with the Commission’s process and making progress on the next
phase of its study.