Lisa Owen interviews Michael Morton and Lawrence Yule

Lisa Owen interviews Michael Morton and Lawrence Yule

Morton makes new claims that his suppliers are being pressured by Countdown (who is a direct competitor).

Owen: But you’re concerned that your supply chain’s being squeezed by Progressive aren’t you?

Morton: Yes I am, it is my belief that that is happening, yes.

Suggests if Progressive is throwing it weigh around "in an un-New Zealand type fashion, then I believe that suppliers will definitely be scared to upset them".

Mad Butcher has launched an anti-bullying campaign to stress that it's sick of being pushed around "by a corporate Australian bully", Progressive Enterprises, which has "a culture of bullying within the whole organisation"

Sales in Mad Butcher stores on Lotto jackpot Saturdays can fall by as much as 15 percent as people choose gambling over food.

Morton would "encourage" a cap on jackpots as $1m can change a life; "there's no need to get to $20, $30 million".

Confirms Mad Butcher has contributed to submission to Commerce Commission complaining about Progressive behaviour

Local Government New Zealand President Lawrence Yule says Progressive has been "pretty adamant" in its fight to keep off-licence liquor outlets open for longer

"I mean some of their behaviour I find bizarre to be honest... In Hauraki for instance there are no supermarkets open after nine p.m. Foodstuffs have accepted the nine p.m closing, but Progressive are battling it out and taken an appeal."

LGNZ looking to create a national fighting fund to help councils protect local decision making as they face legal appeals

(Countdown bosses declined to be interviewed on The Nation).

Please find three photos from today's filming attached. They can be credited to The Nation.

Lisa Owen: You’re putting $100,000 of your own money into an anti-bullying campaign – why?

Michael Morton: Basically, we know what it is like to be bullied, we’ve been bullied by a corporate Australian bully, and we don’t like the feeling that creates for the selves and our own company, so we want to help give people a voice to talk about bully and say that it’s not all right and then try and get that back into the community and hopefully in the later years will flow to corporate New Zealand.

So lets put it on the record, the corporate bully you’re talking about is … ?

Countdown.

… Yeah … Progressive?

Yes.

So you allege they are bullying you. How so? What are they doing?

Look I believe they have a culture of bullying within the whole organisation if you looked at the organisation that came out of allegations that were made about them the supply and stuff and the tactics that were done there. The fact that when we have done any comparative advertising to them, we get smashed with lawyers’ letters, they come down like a sledgehammer with lawyers’ letters. We’re a small New Zealand-owned company, we’re not a big multi-national and all we want to do is gonna be able to tell a story that we believe we’re cheaper than Countdown. And every time we do it, they smash us with lawyers’ letters and make it basically impossible for us to carry on.

Now you allege they put pressure on suppliers as well don’t you? Explain what you’re talking about there?

Look it’s my belief that they do do that. I’m not a supplier to them, so I can’t talk to from that point of view but I’ve definitely had comments from suppliers where that has been brought up to me that pressure is put on them.

What about people supplying you though Michael? What about people that want to supply you… are they being pressured off dealing with you?

Look, it’s in front of the Commerce Commission now, I know that people who have talked about it previously have had lawyers’ letters and stuff and I don’t want to libel myself in this current position, but I think that New Zealand consumers should make that decision for themselves. The allegations have been made, the Commerce Commission’s investigating. I think we should wait and see what the evaluation is of the Commerce Commission.

But you’re concerned that your supply chain’s being squeezed by Progressive aren’t you?

Yes I am, it is my belief that that is happening, yes.

Are you concerned that people are getting scared off supplying you with product by Progressive?

Look, any company that controls 50 percent of the market in New Zealand has a lot of weight and if they choose to throw that weight around in an un-New Zealand type fashion, then I believe that suppliers will definitely be scared to upset them.

Well are you putting that in writing to the Commerce Commission?

I have been interviewed by people that have put a submission into the Commerce Commission, yes.

So you are part of the official complaints process and enquiry?

Yes, that’s correct.

The thing is through you have both been hauled up by Advertising Standards haven’t you for misleading advertising, you’ve both got in hot water over it … you’re equally as bad aren’t you?

Well no, I don’t think that’s the case at all. We have always been the one that has led the comparative advertising because we have a point to make, we’re cheaper than them. So we have a point to make to go and do that, when we go and do it they retaliate and do an ad. We believe they flaunt the law, every time we have gone to the Advertising Standards Authority and asked them for a decision, they won’t give an outright decision on what you’re allowed to say and what you can’t say. We’ve followed their previous decisions that they have made to the letter of the law, and a new panel member might come onto the Advertising Standard Authority and then a different decision comes out of that. Look we can’t afford the tens of thousands of dollars …

But they did uphold complaints against you though, that’s the reality. Progressive had some wins in that field too.

Yeah, they did. But it was very much on small points of law. And look, all we were trying to do is get out and make a point we should be able to advertise as a New Zealand company that this is our price, these are our competitors’ prices, it should be a simply thing. We shouldn’t get tied up in litigation and be bullied into submissions into these big Australian companies.

So you’re basically saying that they’re bullies. They’ve got the resources and the money to fight you legally and tie you up in this kind of battle?

Not just fight us, smash us with litigation. You know, the size of the lawyers’ letters and the tone that they are written in and the veracity that they are delivered is phenomenal.

But isn’t this just the rough and tumble of competition? This supermarket business, the food business, is highly competitive. Aren’t they just playing hard ball in an industry that plays hard bull?

No, they are being bullies because they believe that they’re big and they’re powerful, that they can send us all these letters, they have lawyers on staff, they have some of the biggest law firms in New Zealand working for them, and they think they can tie you up with that litigation. I’m trying to stand up for the little guys here in New Zealand and say, “listen you New Zealanders, you should support the little guys here in New Zealand”.

But Michael, are you a little guy? You’re a successful businessman, you drive a nice car, you’re doing all right. How is Progressive acting any differently to say what you’re doing in your business?

You know, our turnover, we’re a publicly listed company now, we have a turnover of approximately 150 million dollars. They have 5.5 billion dollars worth of turnover, we are very small. We are less than a day or week’s turnover of them, so we are a very small company in comparison. You know I think we punch above our weight from what we are able to deliver to the consumer, and they’re trying to stop us from letting the consumer know that.

So do you know of any retrospective or cash payments made to Progressive?

I can’t confirm that I know of or not know of any of those payments.

You won’t confirm? So you can’t say that they don’t, that they’re not doing that?

No, I can’t say that. Look the Commerce Commission are doing an investigation, I don’t believe the Commerce Commission would be doing an investigation if they didn’t think there were some vitality to those claims. You know when MP Jones made the statements and stuff in Parliament I watched the news like everybody else did in those weeks. Every single journalist that was following the story went out to try and find stories, nobody could get a supplier to talk. If somebody controls fifty percent of the market, they’re not someone you want to upset.

Isn’t robust competition, doesn’t that just lead to cheaper prices though and isn’t that a good thing for the public?

Why do we not get that same sort of level of approach from the other competitor, as the other 50 percent of the market being food stuffs, any other competitors, that doesn’t happen.

But aren’t people just getting cheaper goods as a result of the fact that you guys are battling it out? Isn’t that a good thing for the customer?

No, it’s not. Because what’s actually happening is that we get tied up in so much red tape and we’re not able to go and convey our story of our pricing to the consumer because every time we do try and convey it, we get smashed.

Well let’s bring Lawrence Yule in here, who is the Hastings Mayor and the President of Local Government New Zealand. Mayors at the moment, they’re trying to set up local liquor polices including hours of sales of off-licences and that includes supermarkets, like Countdown. Progressive are pushing back aren’t they? What are they wanting from you?

Lawrence Yule: Well in many cases they fighting against what a lot of councillors do and that is to limit the sale of alcohol in supermarkets. The default position is from seven a.m to 11 p.m. Most councillors in New Zealand are adopting a nine a.m to nine p.m approach and in some cases Countdown in particularly and Progressive have appealed that on the basis that they want it to be open to 11 p.m.

So they want longer hours to sell the booze?

Yes they do. It’s not just Progressive; it’s others like Foodstuffs have done the same.

How would you find Progressive’s behaviour in this though?

They are pretty adamant, I mean some of their behaviour I find bizarre to be honest. In Hauraki for instance there are no supermarkets open after nine p.m. Foodstuffs have accepted the nine p.m closing, but Progressive are battling it out and taken an appeal because they think that they should be open at 11, but there are no supermarkets open at 11?

Are they aggressive? Are they bullying?

Well I think they need to be more cognisant of what local people want. These are local policies, they are meant to be designed by local communities. That’s effectively what the Government has said and they need to recognise that and in many cases a lot of communities around New Zealand are concerned about alcohol related issues and the hours of operation.

And so how many communities are you talking about here?

Well there have been 18 local alcohol polices have been formally out through, there is about 60 appeals to those 18 at varies states of the process. Many councils are now waiting on the outcome of the appeal process in Hauraki and Tasman which are the first two to go through the process.

Isn’t it though that they just want consistent opening hours nationwide and their exercising their legal right to challenge you on this?

That might be what they want but New Zealand is not a consistent place. The hours of operation of supermarkets in New Zealand vary all around New Zealand. It’s not saying they want to keep all their supermarkets open till 11, they don’t. And what we are saying is that these are local polices and if the local community wants alcohol to stop being sold after nine p.m, these local policies should allow that to happen.

So how much is it going to cost rate payers to push back Progressive?

In Hauraki they think it’s over 20,000 dollars, but there are other parts of New Zealand as well. And Local Government New Zealand is considering whether in fact it produces a fund to actually help somebody in these test cases to make sure that the actual local decision making is protected in these local alcohol policies.

So all councils would pay into that fighting fund?

Potentially, we are considering that now, yes.

Hasn’t your own council just conceded some ground to Progressive?

Yes it did, yesterday the Napier and Hastings policy was considered jointly, we had a preference of nine a.m to nine p.m, the councillors that heard that submission then allowed the supermarkets to open at seven a.m and to close at nine p.m.

So you gave them an extra two hours, why did you do that? Is it because it is too much hassle to keep battling and too much money?

Well I wasn’t there, but no I don’t think that is the case. Largely the supermarkets argued that many people go and buy their groceries on the way to sport, often before nine a.m in the morning, and they want to be able to purchase their wine and beer at the same time. I think the councillors listened to that and simply said yes that is a fair enough concession. But at the other end of the day we had lots of evidence suggesting that selling alcohol in supermarkets after nine p.m leads to pre-loading and all sorts of other things which end up affecting on-licences later on.

So you still have to work out the two hours at the other end of the day between nine and 11? You’re still fighting it out over that?

Well we have just released our policy and there is an appeal process, I would be very surprised if they don’t appeal it.

I just want to bring Michael Morton back in before we go. Shane Jones is going to raise some very serious concerns about the impact of Lotto sales at the checkout. What happens in your store? Tell me what happens with sales in your store when there is a big Lotto jackpot weekend?

Michael Morton: A jackpot weekend can take eight to nine percent out of our total week sales, and on a specific Saturday when it’s jackpotting it can be up to 15 percent in some stores of loss of sales… so consumers coming in and making a decisions to buy Lotto tickets.

So how much is that?

Up to 15 percent in some of our stores.

In real dollars?

I’m not a mathematician, but a couple hundred thousand dollars.

So money going away from food and into gambling in your mind?

Yes, yes.

Ok, would you support a cap on the jackpot then?

I’d encourage it. A lot of people that buy Lotto tickets, a million dollars would change there life. Five million dollars would make them have a beautiful life, so there’s no need to get to 20, 30 million dollars.

Thank you very much for joining me this morning Lawrence Yule and Michael Morton.

Thank you.

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