Supermarkets face huge penalties if they are found guilty of failing to open up their grocery wholesale arms to competitors under proposed new regulations.
The NZ Herald reports the penalties range from $500,000 for an individual to $10 million for a company in the case of a “failure to comply with non-discriminatory supply obligations”.
Papers released by the Government show different types of non-compliance – either in relation to the quasi or the full regime – would solicit different types of penalties.
Penalties could be capped at a fixed amount or calculated in relation to how much the supermarket made by doing the thing it shouldn’t have done, or in relation to its turnover.
A company could also be fined up to three times the value of the commercial gain made by the breach, or it could be made to pay the equivalent of up to 10% of its annual turnover in New Zealand for every year the contravention occurred. The method that solicits the greatest penalty could be used.
Cabinet agreed to a set of additional daily penalties that could be applied if a supermarket failed to follow instructions. These range from $30,000 to $100,000 a day.
Additional penalties of between $30,000 and $100,000 a day could be applied to supermarkets that failed to follow instructions.
The moves follow an announcement by the Government in May that the big supermarkets would have to make goods available to competitors at wholesale for a fair price. Competitors are disadvantaged because they can’t enjoy the savings of buying bulk to the extent Foodstuffs and Woolworths can.
A bill is expected to be introduced to Parliament before the end of the year. It will likely be enacted in 2023.
Cabinet agreed to establish a “quasi-regulatory regime” under which major grocery retailers would negotiate wholesale offerings on commercial terms.
It also agreed to create a “regulatory backstop” which would enable it to crack down harder on grocery retailers if they don’t play ball, or if their offerings “are not consistent with what would be expected in a workably competitive wholesale market”.
Read more in the NZ Herald here (paywalled)