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Sungmi Kim/Stuff
Supermarkets will need to follow a new set of rules from September 28.
Supermarkets will face big fines if they do not treat small suppliers fairly, the Government has announced.
The Government’s new Grocery Code of Conduct will come into force on September 28 and will prohibit abuse of power by supermarkets over suppliers.
“The big supermarket chains have not been treating local suppliers fairly – they have been taking advantage of their dominance and imposing unreasonable terms and conditions. We are calling time on their poor behaviour,” Commerce and Consumer Affairs Minister Duncan Webb said.
The new code requires the large corporates – Woolworths and Foodstuffs – to pay on time and treat suppliers fairly, have plain-English supply contracts and deal with small companies in good faith.
“It’s entirely reasonable and hardly too much to ask. Local suppliers have been stretched for a long time, and that’s stifled innovation and the development of our food supply chain.”
The Grocery Commission will act as watchdog to enforce new the rules and penalties for breaching the code include the greater of 3% of turnover or $3 million.
“Establishing this Grocery Code of Conduct is another critical step in the Government’s reform of the grocery sector to make it fair for consumers and suppliers.”
STUFF
The Government is creating the role of grocery commissioner in an attempt to better regulate supermarket rivals Countdown and Foodstuffs. (Video first published on July 7, 2022)
The code will initially apply to the two big supermarket chains, Woolworths New Zealand, which owns Countdown, and Foodstuffs North Island and South Island, which owns Pak’nSave New World and Four Square.
In 2020, the Government commissioned a market study into the retail grocery sector by the Commerce Commission, looking at the factors affecting competition and supply. The final report was published in March last year.
In July, the Government passed the Grocery Industry Competition Act, the legislation that enabled the Grocery Code of Conduct and the position of the Grocery Commissioner to be established.
Other measures the Government has taken so far to improve competition in the grocery sector include banning restrictive land agreements that locked new entrants out of locations for new supermarkets, making unit pricing mandatory and requiring major grocery retailers to open wholesale offerings to other grocery retailers.
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