A parliamentary select committee has agreed a Code of Conduct would help address issues of competition, uncompetitive behaviour, and lack of choice across the grocery sector.
After considering a petition by FGC Chief Executive Katherine Rich, it has suggested the Government consider a Code “to address shortcomings in the sector and to encourage a more robust and competitive market that will reward suppliers, retailers, and consumers alike”.
It acknowledges the Commerce Commission has already included the same recommendation in the final report of its market study into the retail grocery sector.
The Government is expected to make announcement on next steps as a result of the market study by the end of this month.
The petition was received by MP Greg O’Connor and presented to the House on 24 February last year.
In its report, the Economic Development, Science and Innovation Committee has requested “That the House of Representatives support the establishment of a mandatory Grocery Code of Conduct for supermarkets similar to those in Australia and the United Kingdom in order to address potential abuses of market power towards food and grocery manufacturers arising from New Zealand’s highly concentrated grocery retail market.”
It says: “We agree with Mrs Rich that it is important to prevent uncompetitive commercial behaviour in the grocery sector. We recognise and agree that there is a need for a grocery code of conduct. We are pleased to see that the Commerce Commission has recommended this in its final report on the market study into the retail grocery sector. If implemented, we believe this would satisfy the petitioner’s request.
“We acknowledge that there are issues in the grocery sector:
- a general lack of competition in the sector, with two dominating organisations
- uncompetitive behaviour and restrictive practices, especially in retailer and supplier relationships • unclear obligations of good faith
- a lack of dispute resolution processes
- a lack of choice and competitive prices for consumers due to uncompetitive behaviour in the sector.
“The proposed code of conduct would help improve the above issues. We believe the code should ensure that there are protections for retailers, suppliers, and consumers. It should provide for an independent adjudicator such as the Commerce Commission.
“Additionally, a review of the code every two years would ensure that it was working as it should and improvements could be made, if needed.
“We suggest that the Government consider establishing a grocery code of conduct to address shortcomings in the sector and to encourage a more robust and competitive market that will reward suppliers, retailers, and consumers alike.
“We note that the Commerce Commission has already included the same recommendation in the final report of the market study into the retail grocery sector.”
The report is cross-party and there are no minority reports.