Grocery Code of Conduct

Background

The Commerce Commission has completed a market study looking at competition in New Zealand’s retail grocery sector. The Commission has made several recommendations for improving competition in the sector, including creating a mandatory Grocery Code of Conduct to govern relationships between the major grocery retailers and their suppliers.

On 30 May 2022, the Government announced it agreed with the Commission’s recommendation and that it will be creating a mandatory Grocery Code of Conduct. The consultation paper available on this page seeks feedback on the detailed design of the Grocery Code of Conduct.

The draft Code has been developed with input from an advisory group that includes representatives from the major grocery retailers, and from groups that represent suppliers and consumers.

What is a Code of Conduct?

In its final market study report, the Commerce Commission identified imbalances in the bargaining power that major grocery retailers have with their suppliers.

The Grocery Code of Conduct is a form of regulation setting rules, principles or requirements that the grocery retailer will need to comply with. The major grocery retailers will be required to comply with the Grocery Code of Conduct in their trading relationships with all suppliers.

The Grocery Code of Conduct is intended to address the imbalance in negotiating positions between major grocery retailers and their suppliers by constraining the ability of the major retailers to push costs and risks onto suppliers, and improving the transparency of the trading relationship. 

This can create opportunities for suppliers to invest and innovate to bring new products to consumers and to more efficiently produce existing products that consumers buy.

What this consultation sought feedback on

The consultation paper sought feedback on a range of elements of the Grocery Code of Conduct, including:

• General conduct obligations on major grocery retailers of either fair dealing or good faith, to apply at all times and in all interactions.
• Expectations that grocery supply agreements should be written and contain certain content.
• Obligations on the conduct of major grocery retailers in relation to matters of product supply and placement, including delisting, and supply chain processes.
• Obligations on the conduct of major grocery retailers in relation to matters of payment terms, requests for price increases and promotional processes.
• A dispute resolution process for any issues arising under the Grocery Code of Conduct.

Submissions are now available to view

Thank you to everyone who submitted on the Grocery Code of Conduct, which closed on 10 August 2022.

Submissions are available to view below.

Read the submissions we received on the Grocery Code of Conduct(external link)

Further information on the Government response to the market study into supermarkets

The Government has accepted 12 of the Commission’s 14 recommendations, implemented one of them (relating to covenants) and is progressing work to deliver on the others at pace.

Market study into supermarkets