By Rebecca Styles
Research Lead | Hautū Rangahau
The Commerce Commission has warned three grocery suppliers who dealt with the now defunct retailer The Honest Grocer about setting minimum prices for products.
Generally, it’s illegal for suppliers to set a minimum price under the Commerce Act because it can stop retailers from offering lower prices to compete for customers.
“Kiwi consumers and retailers lose out when suppliers set minimum prices of their goods. It makes it hard for new retailers who want to compete on price to enter the market – without that genuine competition, consumers miss out,” said Commission Chair John Small.
Instances of minimum pricing were uncovered during the Commission’s market study into the retail grocery sector last year.
We asked the Commission if it would name the suppliers. It said it typically doesn’t publish the details of compliance letters, but wanted to make the enforcement action known so manufacturers and retailers can “stay on the right of the law”.
The Commission didn’t see any evidence that suggested the major grocery retailers – Woolworths or the Foodstuffs Co-ops – had engaged in any “conduct of concern directed at any other supplier or retailer.”
The Commission has new powers to monitor and regulate the grocery sector under The Grocery Industry Competition Act.
The new Grocery Commissioner, Pierre van Heerden, will oversee a Grocery Supply Code to address the power imbalance between retailers and suppliers, along with a scheme to resolve disputes between the parties.
Make supermarkets price it right
Find out about our campaign to tell the government we need clear rules, stronger penalties and automatic compensation for shoppers.
