The Grocery Industry Competition Bill introduced today will address a wide range of desperately needed changes in the grocery sector, says the New Zealand Food & Grocery Council.
“These proposals will be welcomed by suppliers and consumers as further concrete steps towards helping reduce pain at the checkout and ensuring better choice of products,” says Chief Executive Raewyn Bleakley. “The Government and Minister of Commerce and Consumer Affairs David Clark are to be congratulated for moving so fast on these vital changes.
An expected enactment date in the middle of next year is earlier than many would have hoped for back in March when the Commerce Commission reported back with its recommendations from its Grocery Market Study. Addressing wholesale offerings to competitors on commercial terms, with a backup of additional regulation if those terms compromise competition in the market, is very significant.
“This is a complex area and we welcome measures that will get more competition into the market for the benefit of consumers” says Bleakly.
“There are two ways we’d like to see this happen: by another significant retailer entering the market and by a host of smaller ones able to compete more effectively with the big retailers. This is what we hope the proposals in this bill will achieve.”
The big supermarkets have in the past declined requests from independent retailers seeking wholesale supply. The bill will go some way towards forcing the hands of Countdown and Foodstuffs. The message from the Government is: if this isn’t done voluntarily there will be regulatory intervention.
“That’s on top of a range of other enforcement and monitoring tools the Commissioner will have, including keeping a close eye on how the Government’s reforms are being implemented, and making recommendations if they aren’t.”
Suppliers will be partucularly keen to see the details of the Grocery Code of Conduct, which they have been seeking for many years.
“What we’ll be looking for in the detail of the bill is that it prevents retailers from using unfair negotiating power to force suppliers to accept unfavourable terms of supply that may involve them taking on costs and risks that are better addressed by the major grocery retailers, extends protections against the use of unfair contract terms, and enables certain suppliers to collectively negotiate terms and conditions of supply with the major retailers.
“Suppliers also welcome the bill’s proposal for an alternative dispute resolution scheme, which will provide independent, prompt, and cost-effective resolution of any dispute they may have with a major retailer. Importantly, this will be accessible to suppliers and wholesale customers, particularly smaller businesses.
“The Food & Grocery Council will now start working on its submission on the bill.”