Latest news with #PierreVanHeerden
Yahoo
2 days ago
- Business
- Yahoo
NZ watchdog mulls tightening grocery rules to create fairer playing field
New Zealand's competition regulator is proposing measures to create a fairer playing field between emerging grocery producers and the major supermarkets. In a two-pronged initiative, the Commerce Commission is also concerned that smaller grocery retailers face a disadvantage over their more dominant counterparts when it comes to securing competitive prices from large suppliers. The Commission presented its findings today (5 June) following a review of the Grocery Supply Code and is reaching out for feedback before it publishes its final report in September. "If the Commission doesn't see meaningful progress in 12 months, it will decide if regulations should be changed," the regulator said in a statement. Grocery Commissioner Pierre van Heerden explained: "We know the current grocery market is not serving Kiwi consumers well. The status quo lets a few major players set the rules for the rest of the industry which is negatively impacting consumers, new and expanding competitors, and small suppliers." He added: "These major players are the three main supermarkets and large national and multi-national suppliers. Their significant market share allows them to influence the settings of the market. This limits the ability for competing retailers to enter and grow in the market and often results in smaller suppliers getting an unfair deal." The draft recommendations to the Supply Code include curbing the circumstances in which supermarkets can bill suppliers for routine retail tasks, such as shelf stocking and display arrangement. Van Heerden highlighted the issue of a power disparity, saying that a "power imbalance between the major supermarkets and small suppliers creates a reluctance among suppliers to push back on supermarket demands or behaviour for fear of damaging relationships or losing access to supermarket shelves". New Zealand's grocery market is dominated by Foodstuffs and Woolworths. "The major supermarkets are the largest customers for most grocery suppliers," van Heerden said, controlling 82% of the market. The proposed modifications by the Commission would mandate supermarkets to keep records on how they are complying with the Code when undertaking "certain activities", including "negotiating promotions with suppliers and making deductions to payments without written consent". Looking into the wholesale supply of groceries, the Commission pointed out that promotional payments and rebates are generally inaccessible to newer or smaller retailers. 'A significant issue new and expanding supermarket competitors face is securing access to cost-effective groceries from large suppliers," Van Heerden said. "Competing retailers can't negotiate similar levels of support due to their weaker buying power." He also noted that the prevalent high-low pricing strategy used by New Zealand's major supermarkets is more extreme than in other countries, and a reduction in promotional dependence would result in more consistent and lower prices for consumers. 'The best option is for large suppliers and the major supermarkets to voluntarily change their behaviour. If they don't, we'll have to consider our other alternatives,' van Heerden said. "NZ watchdog mulls tightening grocery rules to create fairer playing field" was originally created and published by Just Food, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
RNZ News
2 days ago
- Business
- RNZ News
Supermarket sector competition reports like Groundhog Day
Supermarket sector competition reports are like Groundhog Day. Photo: 123RF Analysis - Compare the following two statements: "Some of the signs I am seeing is that suppliers are very fearful of repercussion, there's a lack of trust." And... "My concern is that the power imbalance between the major supermarkets and small suppliers creates a reluctance among suppliers to push back." They are both from Grocery Commissioner Pierre van Heerden - the first from August 2024 , the second June 2025 . The nine months between the statements have produced another round of research, recommendations, and call for submissions with the aim of getting better deals for suppliers and consumers, forcing better behaviour and greater competition between the dominant Foodstuffs and Woolworths chains. The Commerce Commission's original market study was ordered in 2020, the final report published in March 2022, and law changes came into effect in 2023. The regulator looked to assist the transition through educating suppliers, offering them sample contracts to put to the supermarket chains, setting up a whistle blowing facility for those wanting to report bad behaviour, and a stern message to Foodstuffs and Woolworths to behave and play nice or risk the Grocery Commissioner's wrath. And yet the latest report concludes much as the first report - the grocery sector is not competitive and the duopoly keeps throwing its weight around, while the small suppliers remain intimidated. Grocery Commissioner Pierre van Heerden. Photo: The Grocery Commissioner has sought to engage with the two big chains and change attitudes. They have conceded most of the easy ground such as ending land banking, accepting the mandatory code of conduct, and agreeing to look at freeing up their wholesale arrangements. But clearly the original reforms have failed to cut through, hence the move to now strengthen the Grocery Supply Code to stop retailers charging suppliers for stocking shelves or for past-their-best by date groceries in the retailer's control; require retailers to reimburse suppliers if they buy stock at promotional prices, but later sell them at higher prices; and prohibit retailers from retaliating against suppliers who assert their rights under the code. van Heerden told RNZ that he had the resolve and the resources to take legal action when justified , but that bringing about change in the sector takes time. To date, the regulator has gone for the relatively low hanging fruit of misleading prices and advertising . The challenge now is to bring about real change in supermarket actions. A prosecution or two may be needed. The wild card in the supermarket debate is what will the government do. Finance Minister Nicola Willis entered the debate verbal guns blazing in March saying the government was looking at all options to bring greater competition to the grocery sector. She said that could be done either by encouraging a major new player into the sector or possibly a 'nuclear option' of breaking up or restructuring the existing chains. The government has issued a formal request for information (RFI) to accelerate improved competition, and advise on potential regulatory and legislative changes, and whether structural changes would be needed. That was an option which the Commerce Commission shied away from as being too difficult, commercially and legally. Going after supermarket chains assessed as profiteering from consumers reads well in headlines, but will the talk be turned into a walk? Or will it be down to van Heerden to make progress slowly, one supermarket aisle at a time? Gyles Beckford is RNZ's business editor. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
RNZ News
2 days ago
- Business
- RNZ News
Commerce Commission wants more rules for big supermarket players
Grocery Commissioner Pierre van Heerden. Photo: Change is on the cards for the supermarket sector, as the Commerce Commission looks at ways to improve competition. It has released a draft report into the review of the Grocery Supply Code and a preliminary view into its wholesale market inquiry. The Commission identified two commercial behaviours which it said reinforced the power of the major supermarkets - Foodstuffs and Woolworths - and the country's biggest grocery suppliers. Grocery Commissioner Pierre van Heerden said a key problem was the power imbalance between major retailers and small suppliers -- meaning those suppliers were reluctant to push back and insist on better prices. He said small suppliers feared damaging relationships or losing access to shelves. "This leads to smaller suppliers taking on costs and risks that are best managed by the retailer." The Commission has also taken issue with promotional payments in wholesale markets, where small retailers cannot compete for deals against big players. "The prices the major supermarkets pay suppliers are subsidised by around $5 billion in rebates, discounts, and promotional payments," van Heerden said. "Competing retailers can't negotiate similar levels of support due to their weaker buying power." The Commission recommended four changes to the Grocery Supply Code, including adding a requirement that if a retailer bought groceries at a discount for a sale period, and then sold the product at a higher price after the sale period, they had to pay the difference to the supplier. It would also prohibit retaliation against suppliers exercising their rights under the code. In the wholesale market inquiry, the Commission recommended two changes, including major supermarkets expanding their wholesale product range and putting in systems to pass promotional funding through to their wholesale customers, so that other retailers could access cheaper prices. It also recommended suppliers reduce their reliance on promotional funding, or allocate the funding to more retailers. The Commission has sought submissions on the draft Grocery Supply Code and would consider those before a final report due by the end of September. It said changes proposed for the wholesale market would be voluntary for now, but if there was no "meaningful progress" in a year, it would decide whether it needed to change regulations. It said a final report on its wholesale supply inquiry would likely be completed in 2026. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
