Latest news with #GroceryIndustryCompetitionAct
NZ Herald
5 days ago
- Business
- NZ Herald
Government should cut GST on food if it's worried about butter price – Fran O'Sullivan
The Finance Minister did not need to call Hurrell in to reaffirm that global dairy prices are at a high and that this would inevitably spill over to higher farmer returns and, in turn, boost regional and finally national economies. (That's the plus side you didn't hear about before the meeting). Or that any notion of Fonterra slashing its own margins was not going to happen. They are thin when compared with the margins applied by supermarkets to dairy products, and she knows it. The upshot is that Willis did seek explanations from Hurrell over the co-operative's pricing, which she of course accepted. Within days, she was talking up Fonterra and the surging global prices on the Mike Hosking show as a plus – as indeed they are when it comes to the impact on the New Zealand economy. Hurrell subsequently made it clear his company is not moving to a two-tiered pricing system: an export price geared to global prices and a subsidised price for domestic consumers. There was more besides. It was sensible for Fonterra to shut the issue down quickly. It currently has its consumer brands business on the market. Any suggestion of a move to a two-tiered system would be a complication to that sales process or indeed an IPO of that business if that ultimately turns out to be the Fonterra board's preferred option. But while there was an element of the performative to the Beehive shenanigans, it does underline how much 'cost of living' issues are a lightning rod when it comes to sparking domestic dissatisfaction with the Government. Willis later described her meeting with Hurrell as 'constructive and engaging', underlining the fact that Fonterra does not control retail prices and that the final price is set by supermarkets, whose contracts and pricing strategies vary. This was more grist to Willis' campaign against what she claims are supermarkets profiteering at the expense of consumers. Already, she has been working to reduce the barriers to entry for other competitors. Willis has been encouraged that the Commerce Commission has taken a case against grocery giant Foodstuffs North Island and Gilmours Wholesale to court over what it believes is cartel conduct. The regulator said civil proceedings would be filed against the big grocery suppliers under the Commerce Act and Grocery Industry Competition Act (GICA). Foodstuffs 'strongly denies' any unlawful conduct. The Commerce Commission has also levelled criminal charges against retailer Noel Leeming over what it claims is a misleading price-matching promotion. The company 'firmly' maintains it had not committed an offence and would vigorously defend itself against multiple charges of misleading customers under the Fair Trading Act. Put that to one side. Prices have escalated on multiple fronts: dairy products, meat and some fruits; electricity and gas, rates, insurances. But they have decreased on others: mortgage and loan interest rates, and some fuels. There is little point in trying to jawbone prices down. In many respects, the answer lies with Willis. If she is overly concerned, she could wipe the 15% GST from particular food items. This is the case in Australia, where its 10% GST does not apply to meat, fish, produce, cheese and eggs, plain milk and cream, bread, butter and other spreads, bottled water, tea and coffee, cooking ingredients and oils, or infant formula. In Britain, most foods are zero-rated. Many European countries have reduced value-added tax rates for food, typically running at 5%-7%. Basic foods are exempted in Singapore, there is an 8% rate in Japan, and in the United States some states exempt various food items from sales tax. The upshot is that New Zealand verges on being an outlier in this area. Any changes to the GST regime would, however, have an impact on how New Zealand's tax regime is perceived as being neutral. Farmers are not the enemy. There is much to celebrate from our rural sector, which will deliver nearly $60 billion in export earnings this year. The fixation on rising prices has also overly consumed the Prime Minister, who frequently talks about 'cost of living issues'. But this is not going to be solved in the medium term. The upshot is that, short of any intervention by the Government, consumers will just have to suck it up.
1News
15-07-2025
- Business
- 1News
Proceedings filed against major grocers for alleged cartel conduct
The Commerce Commission will be filing legal proceedings against Foodstuffs North Island and Gilmours over allegations of cartel conduct. The Commission said it would "shortly" file civil proceedings against the two companies for alleged breaches of the Commerce Act and the Grocery Industry Competition Act. Gilmours is owned by Foodstuffs North Island. Foodstuffs North Island has denied any unlawful conduct. It followed an investigation by the Commission into agreements the companies entered with a national grocery supplier regarding the supply of products to a hospitality customer. The supplier and customer both had "considerable volumes of business" with Foodstuffs North Island and Gilmours. ADVERTISEMENT "When FSNI/Gilmours discovered the supplier and customer had established a direct trading relationship, they persuaded the supplier to re-route that business through them," the Commerce Commission said. Commerce Commission chairman Dr John Small said the Commission believed the companies had engaged in cartel conduct and breached the Commerce Act. Cartel conduct is when two or more businesses agree not to compete with each other. This could include price fixing, allocating customers, rigging bids or restricting the output of goods and services. 'We take allegations of cartel conduct very seriously. Cartel conduct harms consumers through higher prices or reduced quality, and it harms other businesses that are trying to compete fairly,' Small said. 'In this instance, the supplier wanted to provide a competitive supply channel, but this was stopped by the agreement with FSNI and Gilmours. 'We do not tolerate this kind of behaviour and will not hesitate to take court action, where appropriate." The morning's headlines in 90 seconds, including Trump's deadline for Russia, legal action against a supermarket giant, and an unusual marathon record. (Source: Breakfast) ADVERTISEMENT The commission also believed the companies obstructed the supplier's ability to sell groceries to the customer in question and did not deal with the supplier in good faith, which breached GICA. 'The Grocery Supply Code was introduced to address the power imbalance between the major supermarkets and their suppliers,' Grocery Commissioner Pierre van Heerden said. 'The major supermarkets are the largest customers for most grocery suppliers. This creates a reluctance for suppliers to call out bad behaviour or push back on the supermarkets for fear of damaging relationships or losing access to supermarket shelves. 'The Commission is acutely aware of the risk suppliers may face coming forward and has ways to protect their identity and business. We have anonymous reporting tools for cartels and GICA and encourage anyone concerned to use these ways of contacting us." Following the Commission's statement this morning, a Foodstuffs North Island spokesperson said: "Foodstuffs North Island and our stores are committed to complying with all our regulatory obligations, and we co-operated fully with the Commerce Commission throughout their investigation of this matter." The business "strongly" denied any unlawful conduct. "As this matter will be before the Court in due course, it would not be appropriate to comment further at this time.' ADVERTISEMENT Foodstuffs North Island was issued a warning earlier this month for the treatment of a supplier that likely breached the Grocery Industry Competition Act 2023.
Scoop
14-07-2025
- Business
- Scoop
Commerce Commission To File Proceedings Against Foodstuffs North Island And Gilmours, Alleging Cartel Conduct
The Commerce Commission will shortly file civil proceedings against Foodstuffs North Island Limited (FSNI) and Gilmours Wholesale Limited (Gilmours) for alleged cartel conduct (market allocation) in breach of the Commerce Act, and alleged breaches of the Grocery Industry Competition Act (GICA). The Commission investigated agreements that FSNI and Gilmours entered into with a national grocery supplier regarding the supply of products to a hospitality customer. The supplier and the customer both have considerable volumes of business with FSNI/Gilmours. When FSNI/Gilmours discovered the supplier and customer had established a direct trading relationship, they persuaded the supplier to re-route that business through them. Commerce Commission Chair, Dr John Small, says the Commission believes FSNI and Gilmours engaged in cartel conduct which is a breach of section 30 of the Commerce Act. 'We take allegations of cartel conduct very seriously. Cartel conduct harms consumers through higher prices or reduced quality, and it harms other businesses that are trying to compete fairly,' Dr Small says. 'In this instance, the supplier wanted to provide a competitive supply channel, but this was stopped by the agreement with FSNI and Gilmours. 'We do not tolerate this kind of behaviour and will not hesitate to take court action, where appropriate,' Dr Small says. The Commission is also filing proceedings against FSNI and Gilmours under GICA. The Commission believes FSNI and Gilmours obstructed the supplier's ability to sell groceries to the customer in question, and did not deal with the supplier in good faith. Grocery Commissioner, Pierre van Heerden, says this behaviour could be in breach of the Grocery Supply Code. 'The Grocery Supply Code was introduced to address the power imbalance between the major supermarkets and their suppliers,' Mr van Heerden says. 'The major supermarkets are the largest customers for most grocery suppliers. This creates a reluctance for suppliers to call out bad behaviour or push back on the supermarkets for fear of damaging relationships or losing access to supermarket shelves. 'The Commission is acutely aware of the risk suppliers may face coming forward and has ways to protect their identity and business. We have anonymous reporting tools for cartels and GICA and encourage anyone concerned to use these ways of contacting us,' Mr van Heerden says. As this matter will soon be before the Court, the Commission will not be providing further comment on the case at this time. Background Cartel conduct A cartel is where two or more businesses agree not to compete with each other. Cartel conduct can take many forms, including price fixing, allocating customers, rigging bids or restricting the output of goods and services. Because cartels can harm the interests of consumers - goods and services become more expensive, consumers end up with fewer choices, and quality and service levels are likely to deteriorate – tackling cartels is one of the Commission's key enforcement priorities. Grocery Supply Code New Zealand's mandatory Grocery Supply Code was introduced under the Grocery Industry Competition Act 2023. The Supply Code was created to increase transparency and certainty for suppliers through a set of rules supermarkets need to follow when dealing with suppliers. Bringing increased certainty to agreements between supermarkets and suppliers is intended to give suppliers more confidence to innovate and invest in more choice for consumers.
1News
02-07-2025
- Business
- 1News
Foodstuffs North Island warned for 'likely' breach of supply code
Foodstuffs North Island has been issued a warning for treatment of a supplier that likely breached the Grocery Industry Competition Act 2023. The Commerce Commission said it believed Foodstuffs North Island "likely breached a fundamental aspect of the Supply Code which is that retailers deal with suppliers in good faith at all times". The company responded to the commission's warning by stating it took its obligations to suppliers seriously and was committed to keeping fair and constructive relationships. New Zealand's mandatory Grocery Supply Code was introduced under the Grocery Industry Competition Act, created to increase transparency and certainty for suppliers through a set of rules supermarkets need to follow when dealing with suppliers. "Foodstuffs North Island appears to have obstructed and delayed a supplier request by acting in ways that we believe were uncooperative and unreasonable," said Grocery Commissioner Pierre van Heerden. ADVERTISEMENT He was "concerned" this followed a pattern of behaviour that has been present in the industry for decades. "This behaviour has been enabled for so long, due to the significant power imbalance between the major supermarkets — who hold the vast majority of the market — and suppliers, who have limited bargaining power in comparison," he said. A category manager at Foodstuffs North Island — who acted as the main point of contact for the supplier — also came under investigation regarding their role in the matter. "Suppliers are reliant on their relationships with the retailers' commercial teams, so the staff in these roles within the supermarkets hold a lot of power. Any behaviour that weaponises this power imbalance is unacceptable," van Heerden said. "The major supermarkets have a responsibility to make sure their staff are properly trained. They need to make sure their staff follow the rules and deal with suppliers in good faith. "The changes we're proposing to the Supply Code are intended to provide more scrutiny to these relationships and clarity about what is acceptable behaviour." The morning's headlines in 90 seconds, including Australia's weather bomb, the surprising costs of getting one more dog, and BTS are back. (Source: 1News) ADVERTISEMENT Van Heerden said the Commerce Commission had surveyed suppliers and was concerned with the responses. "Our supplier survey showed that 37% of suppliers reported their interactions with Foodstuffs North Island as negative or very negative. This is significantly higher than suppliers' ratings for Woolworths and Foodstuffs South Island, at approximately 20%." Van Heeden said the Commission was "focused on addressing this power imbalance and improving things for suppliers". "We really appreciate where suppliers have come forward to tell us about issues so we can take action – like in this case where we heard directly from the supplier involved." Foodstuffs North Island response A Foodstuffs North Island spokesperson told 1News the company took Grocery Supply Code obligations seriously, and was committed to "maintaining fair and constructive relationships with our suppliers". "Since the introduction of the code, we've implemented a comprehensive programme of training and support for our team, including dedicated intranet resources, regular drop-in sessions for commercial staff, and mandatory training modules. ADVERTISEMENT "We'll continue to work with the commission to ensure our people understand and uphold the standards expected," the spokesperson said.
Scoop
01-07-2025
- Business
- Scoop
Foodstuffs North Island Warned For Likely Breaking Grocery Competition Law
The Commerce Commission has issued a warning to Foodstuffs North Island (FSNI) for their treatment of a supplier that likely breached the Grocery Industry Competition Act 2023. 'We believe that Foodstuffs North Island likely breached a fundamental aspect of the Supply Code which is that retailers deal with suppliers in good faith at all times,' Grocery Commissioner Pierre van Heerden says. "I'm concerned that this follows a pattern of behaviour that has been present in the industry for decades. 'This behaviour has been enabled for so long due to the significant power imbalance between the major supermarkets, who hold the vast majority of the market, and suppliers, who have limited bargaining power in comparison. 'Foodstuffs North Island appears to have obstructed and delayed a supplier request by acting in ways that we believe were uncooperative and unreasonable. 'In this instance, based on the evidence we have, we decided a warning was the right response. However, if more examples come to light, we will not hesitate to take further action,' Mr van Heerden says. The Category Manager at FSNI, who acted as the main point of contact for the supplier, also came under investigation regarding their role in this matter. 'Suppliers are reliant on their relationships with the retailers' commercial teams, so the staff in these roles within the supermarkets hold a lot of power. Any behaviour that weaponises this power imbalance is unacceptable,' Mr van Heerden says. 'The major supermarkets have a responsibility to make sure their staff are properly trained. They need to make sure their staff follow the rules and deal with suppliers in good faith. 'The changes we're proposing to the Supply Code are intended to provide more scrutiny to these relationships and clarity about what is acceptable behaviour. 'Our supplier survey showed that 37% of suppliers reported their interactions with Foodstuffs North Island as negative or very negative. This is significantly higher than suppliers' ratings for Woolworths and Foodstuffs South Island, at approximately 20%. 'We're focused on addressing this power imbalance and improving things for suppliers. We really appreciate where suppliers have come forward to tell us about issues so we can take action – like in this case where we heard directly from the supplier involved,' Mr van Heerden says. Only a Court can determine if there has been a breach of the Act. Background The warning letter can be found on the Commission's website. New Zealand's mandatory Grocery Supply Code was introduced under the Grocery Industry Competition Act. The Code was created to increase transparency and certainty for suppliers through a set of rules supermarkets need to follow when dealing with suppliers. Bringing increased certainty to agreements between supermarkets and suppliers would give suppliers more confidence to innovate and invest in more choice for consumers. The maximum penalty for breaches of the Supply Code for an individual is $200,000, or in any other case the greater of $3 million, and the value of any commercial gain; or if that can't be ascertained 3% of the company turnover.
