Woolworths, a prominent supermarket chain, has recently been cautioned about potentially violating the Grocery Industry Competition Act. This situation arose due to the delisting of certain products in its New Zealand branches.
The Grocery Industry Competition Act is governed by the New Zealand Commerce Commission (NZCC). Its primary objective is to regulate the relationship between suppliers and supermarkets. By demanding greater transparency when products are delisted from store shelves, it seeks to protect the interests of smaller suppliers.
The act, which was established in 2023, is expected to incorporate the Grocery Supply Code in May. Non-compliance with the code could lead to penalties, as per the statement from the commission.
The NZCC has been scrutinizing the product-range review methods of leading supermarkets to ensure they are complying with the code.
A spokesperson commented on the situation, saying, “Through this process, we identified and investigated situations where it appeared that Woolworths New Zealand might not be fulfilling its responsibilities.” Post investigation, Woolworths New Zealand was issued a warning for a probable breach of the Grocery Industry Competition Act. However, the spokesperson noted that only a court can establish whether an actual breach has occurred. Since the warning, Woolworths has amended its procedures to comply with the regulations.
Alice Hume, the head of groceries at NZCC, stated that this action was taken in response to suppliers’ concerns. She highlighted the pressure on suppliers with the possibility of their products being delisted. This situation could further exacerbate the imbalance of power between major supermarkets and smaller suppliers.
“The fear of losing market access can pressure suppliers into accepting unfavorable conditions and foster distrust towards supermarkets’ decision-making processes,” Hume explained. “The code is instrumental in equalizing the power dynamics between large supermarkets and smaller suppliers, so we treat compliance with the utmost seriousness.”
Hume also mentioned that the NZCC continues to assess the product ranges available at supermarkets, inviting any worried suppliers to reach out to the commission.
What is the purpose of the Grocery Industry Competition Act?
The Grocery Industry Competition Act is designed to govern the relationship between supermarkets and suppliers, with a demand for more transparency during product delisting to protect smaller suppliers.
What are the consequences of breaching the Grocery Supply Code?
Non-compliance with the Grocery Supply Code, which is part of the Grocery Industry Competition Act, can result in penalties.
What are the concerns of the smaller suppliers?
Smaller suppliers are concerned about potential product delisting, which could reinforce power imbalances with major supermarkets, pressurize them into accepting unfavorable conditions, and induce a lack of trust in supermarkets’ decision-making processes.
