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20 November 2014

Investigation clears Countdown

Commerce Commission looked at way suppliers were treated.

A Commerce Commission investigation into the way Progressive Enterprises Ltd, the owner of Countdown supermarkets, treats its suppliers has not found any reason to prosecute.

The investigation was launched in February after then Labour MP Shane Jones wrote to the Commission accusing the company of “anti-competitive and allegedly extortionary” behaviour. He had spoken about the issue under parliamentary privilege earlier in the day.

The Food and Grocery Council also complained to the Commission on the same day.

As part of the investigation, the Commerce Commission issued 41 statutory notices to suppliers, compelling them to provide information.

Despite finding Progressive’s conduct was not likely to have breached the Fair Trading Act or Commerce Act, chief executive Brent Alderton said it did highlight two areas commercial parties should be careful around.

“The first is that ambiguity in business communications should be avoided as it can lead to misunderstanding that can place you at risk of breaching the law,” Mr Alderton said.

“The second is that exchanging information about competitors’ future behaviour, or discussing supplier interactions with a competitor carries significant risks for all involved. Individuals who do so are exposing both themselves personally and their company to a potential breach of the law.”

The report details how Progressive was alleged to have asked suppliers to make retrospective payments to compensate for Progressive’s lack of profits from the supplier’s products. It was alleged the demands were in the millions of dollars and backed by threats to withdraw products from supermarket shelves.

The investigation found this to be a misunderstanding over what Progressive termed the “ask” when it met with two large suppliers at the start of this year. The “ask” was the difference between the supplier’s financial performance and Progressive’s expectation.

Both companies were confused at the time over whether they were being asked for a lump sum payment to make up for lack of profits or told the amount of improvement expected. However, further communication made it clear Progressive was not after a retrospective payment.

The investigation found no evidence of a threat to blacklist products but did acknowledge the suppliers would have felt commercial pressure.

“However, the evidence did not suggest that this pressure amounted to coercion,” the report said.

The report details evidence that two suppliers gave information to Progressive about one of its competitor’s future pricing. “However, that evidence did not suggest that Progressive entered into, or attempted to enter into, an anti-competitive agreement or understanding with any competing retailer, either directly or indirectly,” the report said.

Progressive managing director Dave Chambers said “the shadow of these false allegations has been distracting”.

“We hope some lessons can be learned about the damage false allegations made under parliamentary privilege can cause,” Mr Chambers said

Investigation clears Countdown collection

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