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13 February 2014

Code a must for supermarkets

Is it time for the country’s two supermarket chains to agree to operate by a Code of Conduct?

Is it time for the country’s two supermarket chains to agree to operate by a Code of Conduct? Yes but any code would need to be supported by an Ombudsman like arbiter to ensure it was adhered to.

Claims by Labour MP Shane Jones this week that Countdown was using stand over tactics to force retrospective payments by its suppliers should not really come as a surprise. New Zealand’s equivalent of the Commerce Commission in Australia has been investigating just such claims for a year. In the UK matters have progressed even further. An investigation into similar practices has led to a code and to the appointment of a Groceries Code Adjudicator.

The Adjudicator can fine retailers for breaches, make recommendations against the retailer, require them to publish details of their breaches.

Among other clauses, the Code says supermarkets must pay for goods on time, de-list suppliers only for genuine commercial reasons, give reasonable notice of delisting with an opportunity to discuss with the code compliance officer, not demand position payments or unjustified payments.

NZ has one of the least competitive supermarket markets in the world, so it would be astonishing if the country was immune to unsavoury practices happening elsewhere. Read Consumer’s recent article on supermarket power here.

But what impact does this have on consumers? Generally when supermarkets wield their power, the result is less choice for consumers and higher prices. For example another insidious development is the rise of supermarkets stocking their shelves with their own products, squeezing out local suppliers. Where once home brands were seen as a way of consumers getting low-frills cheaper products, today supermarkets are using it to get their own products on the shelves. Long term that means less choice and higher prices.

The Commerce Commission is the right organisation to be investigating these recent claims. It can look to its Aussie counterpart for tips on how to extract information from both suppliers and the supermarkets, and for the development of a code.

About the author

Sue Chetwin has been our Chief Executive since April 2007 after more than 25 years in print journalism. She was formerly the Editor of Sunday News, Sunday Star Times and the Herald on Sunday. She says there are strong parallels between consumer advocacy and journalism.

Sue oversees all of Consumer’s operations and is also the public face of the organisation. Sue is a director of the Banking Ombudsman Scheme, an alternate on the Electricity and Gas Complaints Commission and a member of the Electricity Authority Retail Advisory group.

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