This Bill amends the Commerce Act 1986 to require that a supermarket adjudicator is established, to resolve disputes between supermarkets and suppliers. The adjudicator will be funded by a levy of supermarkets and suppliers and will have power to involve the Commerce Commission when required. The first task of the adjudicator will be to develop a code of conduct for supermarket grocery suppliers to prevent or mitigate restrictive trade practices and unfair dealings in the supply of groceries to supermarkets and to ensure that all parties are treated fairly. This Bill will require that designated supermarket chains comply with the code of conduct to regulate grocery supply practices and promote fair trade practices. The code will provide a guiding negotiation framework to keep supplier-retailer negotiations free from the misuse of power. The draft code will be prepared by the adjudicator in consultation with representatives of interested parties such as designated supermarket chains, the New Zealand Food and Grocery Council, Horticulture New Zealand, and Consumer New Zealand, and must be approved by the Minister of Commerce.
New Zealand has just 2 supermarket chains, which control about 90% of our grocery retail market; this is one of the highest concentrations in the world. The market has become so consolidated, and the buying power of supermarkets so extensive, that supermarkets are able to dictate terms and conditions and prices to suppliers. This poses a risk to long-term consumer interests as well as to suppliers, in particular to small-scale suppliers and growers. If small suppliers are forced out of business by anti-competitive practices, this will have a detrimental effect on consumer choice and on competition in the sector. This Bill follows the lead of the United Kingdom, which already has in place a Groceries Supply code of conduct and adjudicator, and Australia, where progress has been made on developing a fairer grocery market by having the Australian Competition and Consumer Commission (ACCC) carry out a comprehensive inquiry into the grocery market. The inquiry lead the ACCC to state that it finds merit in the idea of the introduction of a legally enforceable supermarket and grocery industry code of conduct with clear, real obligations that set out acceptable practices.