Foodstuffs North Island warned for 'likely' breach of supply code
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.
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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)
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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.
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"We'll continue to work with the commission to ensure our people understand and uphold the standards expected," the spokesperson said.
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