Latest news with #vanHeerden
Scoop
6 days ago
- Business
- Scoop
Commerce Commission To File Proceedings Against Foodstuffs North Island And Gilmours, Alleging Cartel Conduct
The Commerce Commission will shortly file civil proceedings against Foodstuffs North Island Limited (FSNI) and Gilmours Wholesale Limited (Gilmours) for alleged cartel conduct (market allocation) in breach of the Commerce Act, and alleged breaches of the Grocery Industry Competition Act (GICA). The Commission investigated agreements that FSNI and Gilmours entered into with a national grocery supplier regarding the supply of products to a hospitality customer. The supplier and the customer both have considerable volumes of business with FSNI/Gilmours. When FSNI/Gilmours discovered the supplier and customer had established a direct trading relationship, they persuaded the supplier to re-route that business through them. Commerce Commission Chair, Dr John Small, says the Commission believes FSNI and Gilmours engaged in cartel conduct which is a breach of section 30 of the Commerce Act. 'We take allegations of cartel conduct very seriously. Cartel conduct harms consumers through higher prices or reduced quality, and it harms other businesses that are trying to compete fairly,' Dr Small says. 'In this instance, the supplier wanted to provide a competitive supply channel, but this was stopped by the agreement with FSNI and Gilmours. 'We do not tolerate this kind of behaviour and will not hesitate to take court action, where appropriate,' Dr Small says. The Commission is also filing proceedings against FSNI and Gilmours under GICA. The Commission believes FSNI and Gilmours obstructed the supplier's ability to sell groceries to the customer in question, and did not deal with the supplier in good faith. Grocery Commissioner, Pierre van Heerden, says this behaviour could be in breach of the Grocery Supply Code. 'The Grocery Supply Code was introduced to address the power imbalance between the major supermarkets and their suppliers,' Mr van Heerden says. 'The major supermarkets are the largest customers for most grocery suppliers. This creates a reluctance for suppliers to call out bad behaviour or push back on the supermarkets for fear of damaging relationships or losing access to supermarket shelves. 'The Commission is acutely aware of the risk suppliers may face coming forward and has ways to protect their identity and business. We have anonymous reporting tools for cartels and GICA and encourage anyone concerned to use these ways of contacting us,' Mr van Heerden says. As this matter will soon be before the Court, the Commission will not be providing further comment on the case at this time. Background Cartel conduct A cartel is where two or more businesses agree not to compete with each other. Cartel conduct can take many forms, including price fixing, allocating customers, rigging bids or restricting the output of goods and services. Because cartels can harm the interests of consumers - goods and services become more expensive, consumers end up with fewer choices, and quality and service levels are likely to deteriorate – tackling cartels is one of the Commission's key enforcement priorities. Grocery Supply Code New Zealand's mandatory Grocery Supply Code was introduced under the Grocery Industry Competition Act 2023. The Supply Code was created to increase transparency and certainty for suppliers through a set of rules supermarkets need to follow when dealing with suppliers. Bringing increased certainty to agreements between supermarkets and suppliers is intended to give suppliers more confidence to innovate and invest in more choice for consumers.
1News
02-07-2025
- Business
- 1News
Foodstuffs North Island warned for 'likely' breach of supply code
Foodstuffs North Island has been issued a warning for treatment of a supplier that likely breached the Grocery Industry Competition Act 2023. 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. ADVERTISEMENT 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) ADVERTISEMENT 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. ADVERTISEMENT "We'll continue to work with the commission to ensure our people understand and uphold the standards expected," the spokesperson said.
Scoop
01-07-2025
- Business
- Scoop
Foodstuffs North Island Warned For Likely Breaking Grocery Competition Law
The Commerce Commission has issued a warning to Foodstuffs North Island (FSNI) for their treatment of a supplier that likely breached the Grocery Industry Competition Act 2023. 'We believe that 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,' Grocery Commissioner Pierre van Heerden says. "I'm concerned that this follows 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. 'Foodstuffs North Island appears to have obstructed and delayed a supplier request by acting in ways that we believe were uncooperative and unreasonable. 'In this instance, based on the evidence we have, we decided a warning was the right response. However, if more examples come to light, we will not hesitate to take further action,' Mr van Heerden says. The Category Manager at FSNI, who acted as the main point of contact for the supplier, also came under investigation regarding their role in this 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,' Mr van Heerden says. '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. '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%. 'We're 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,' Mr van Heerden says. Only a Court can determine if there has been a breach of the Act. Background The warning letter can be found on the Commission's website. New Zealand's mandatory Grocery Supply Code was introduced under the Grocery Industry Competition Act. The Code was created to increase transparency and certainty for suppliers through a set of rules supermarkets need to follow when dealing with suppliers. Bringing increased certainty to agreements between supermarkets and suppliers would give suppliers more confidence to innovate and invest in more choice for consumers. The maximum penalty for breaches of the Supply Code for an individual is $200,000, or in any other case the greater of $3 million, and the value of any commercial gain; or if that can't be ascertained 3% of the company turnover.
Otago Daily Times
08-06-2025
- Business
- Otago Daily Times
Slow supermarket competition progress
Reading reports of Grocery Commissioner Pierre van Heerden's concerns last week about the supermarket giants was like hearing the message there is an unexpected item in the bagging area at the self-checkout. Frustrating noise which is all too familiar. Shoppers would have lost track of how many years it is since they read/heard about the unfair tactics employed by the giant supermarkets when dealing with suppliers, the difficulty of small players such as dairies getting access to wholesale goods at reasonable prices, and the question of whether special prices are really what they seem. Those still struggling to pay at the checkout could be forgiven for asking if much has changed since the final report on the market study of the grocery sector from the Commerce Commission more than three years ago. Whatever has occurred in the aftermath of that has not had the trickle-down effect of reducing shoppers' weekly spending or doing enough to alter the behaviour of the three big players, Woolworths, Foodstuffs North Island, and Foodstuffs South Island. Last year the grocery commissioner was scathing about the lack of progress towards improving competition and, as well as a review of the Grocery Supply Code, which was introduced in September 2023, he decided to take another look at the wholesaling behaviour of the giant companies. Mr van Heerden has reported back on both questions. In his draft review of the code, he proposes strengthening it to stop retailers insisting smaller suppliers take on costs and risks best managed by the retailers themselves. This would include not allowing retailers to charge suppliers for stocking shelves or for goods that deteriorate and become unfit for sale while in the supermarkets' control. The commissioner is worried the power imbalance between the two groups "creates a reluctance among suppliers to push back on supermarket demands or behaviour for fear of damaging relationships or losing access to supermarket shelves". Among his proposed changes is prohibiting retailers from retaliating against suppliers who exercise their rights under the code. The type of behaviour he is still grappling with should have been sorted out long before now. Suppliers have been complaining about bullying take-it-or-leave-it deals for years. On the wholesaling question, one of the changes Mr van Heerden wants is for the major supermarkets to expand their wholesale product range and pass promotional funding through to their wholesale customers so other retailers can access lower prices. Again, this is a problem flagged years ago, and we wonder why he is allowing the big three another 12 months to voluntarily sort it out before he moves to seek regulatory change. This year, there has also been much enthusiasm from Economic Growth Minister Nicola Willis about attracting a new major player to provide much-needed competition and ultimately force prices down for shoppers. But it is still difficult not to be sceptical about the chance of her efforts succeeding without some direct intervention by the government which might include such measures as carving off existing brands owned by the giants into separate businesses, splitting wholesale and retail provision of groceries, or other divestment options. If her party was of a mind to head down any sort of interventionist path it would likely have the support of coalition partner New Zealand First, which has railed against the supermarket giants' stranglehold. In its coalition agreement it requires the government to "explore options to strengthen the powers of the Grocery Commissioner, to improve competitiveness, and to address the lack of a third entrant to remove the market power of a duopoly". However, newly minted deputy prime minister and leader of Act New Zealand David Seymour, who voted against the introduction of a grocery commissioner, would be more difficult to persuade. His previously expressed view is that the way to increase competition is to cut back "thickets of regulation" dissuading new entrants, whether in overseas investment, resource management or labour laws. In such a political climate, the sort of change which could push prices down and mean something to the hapless shopper still seems millions of barcode scans away.
Otago Daily Times
04-06-2025
- Business
- Otago Daily Times
Watchdog wants more rules for big supermarket players
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. Supermarkets respond In a statement, Foodstuffs North Island said it would review the commission's draft report and recommendations, though it maintained its support for the status quo. "We support the existing intent of the code and the dispute resolution process," a Foodstuffs North Island spokesperson said. "We are open to working with the commission on ideas to lift awareness and understanding of the code, particularly among smaller suppliers who may need additional support." Foodstuffs said regularly surveyed its more than 2000 suppliers "to ensure we are working as partners, listening, and constantly improving". "Any supplier who has an issue should raise it through the appropriate channel - either with us directly or through the Commerce Commission." Woolworths New Zealand interim managing director Pieter de Wet said the company had positive relationships with its 1400 local and international suppliers. "We support the Grocery Supply Code because we feel that consistent rules hold everyone to the same high standard and help businesses of all sizes to grow and succeed," de Wet said in a statement. "We're working closely with suppliers and wholesale customers to further improve and develop our wholesale business." Woolworths New Zealand would work constructively with the commission through the submission process.
