New Grocery code of conduct mandatory for suppliers

The Commerce Commission’s competition market study into the grocery sector showed a power imbalance between large grocery retailers and suppliers.

A mandatory Code of Conduct will improve this relationship by promoting more transparency and certainty in supply arrangements, and by making sure that major retailers don’t push extra costs and risks onto suppliers.

The Code of Conduct is part of the wider reforms to improve competition in the grocery sector. Other measures include

• the banning of restrictive land covenants that locked new entrants out of the best locations for new supermarkets
• the introduction of unit pricing, so people know what they are paying for
• the establishment of a wholesale access regime, dispute resolution scheme and the appointment of Grocery Commissioner.

The Code will come into effect on 28 September and will initially apply to the two main grocery retailers – Woolworths New Zealand (including the Countdown Brand) and Foodstuffs North Island and South Island (including Pak ‘n Save, New World and Four Square). The Commerce Commission will be responsible for enforcing the Code. Breaches of the Code may result in substantial fines.

Read more in the Market studies section of our website:

Competition market study into supermarkets