Grocery competition

The New Act

On 10 July 2023, the Grocery Industry Competition Act 2023 (CICA) came into force, with the purpose of promoting competition and efficiency in the grocery industry for the long-term benefit of consumers in New Zealand.  The primary mechanism by which CICA seeks to achieve those ends is by regulating the relationships between Regulated Grocery Retailers (RGRs) and their suppliers.

 At present, Foodstuffs and Woolworths are the only RGRs, though the CICA provides for other RGRs to be designated on the recommendation of the Minister of Commerce and Consumer Affairs.  The CICA requires the Commerce Commission (CC) to monitor competition and efficiency in the grocery sector and provide an annual report – the CC intends to release the first of those reports as early as June 2024.

The New Grocery Supply Code

On 28 September 2023, the Grocery Supply Code (GSC) came into force, which all RGRs and associated persons are required to comply with.  The GSC is intended to promote fair conduct between retailers and suppliers, and foster effective competition, confidence, and diversity of suppliers in the grocery industry.  There is currently a six-month grace period until 28 March 2024 to allow RGRs and suppliers time to review and update their existing agreements to comply with the GSC.

The Grocery Supply Code (GSC) is intended to promote fair conduct between retailers and suppliers, and foster effective competition, confidence, and diversity of suppliers in the grocery industry. 

The following is a summary of the main provisions in the GSC:

• RGRs must deal with suppliers in good faith;
• RGRs must ensure that their grocery supply agreements are written in plain English;
• RGRs must not vary a grocery supply agreement without the consent of the supplier concerned or with retrospective effect;
• RGRs must not require a supplier to use a particular transport or logistics service;
• RGRs must not require a supplier to pay for the costs of its business activities unless this is agreed and reasonable;
• RGRs must not obstruct a supplier from supplying groceries to any other party;
• RGRs must respect the intellectual property of suppliers.

Wholesale Supply

RGRs are obliged under the CICA to consider requests for wholesale supply in good faith and consistent with a competitive wholesale market.  If the CC considers that additional regulation is necessary to achieve those objectives, it may require a RGR to establish a framework providing transparency of its criteria for wholesale supply and/or impose rules relating to wholesale supply.  All RGRs must have, by 10 October 2023, implemented effective systems and processes that are necessary to supply wholesale groceries to wholesale customers.  If a RGR fails to comply with its obligations to facilitate wholesale supply agreements, wholesale customers may seek compensation.

Dispute Resolution Scheme

A regulated dispute resolution scheme is currently being established, under which a binding determination by a non-judicial decision-maker can be made on eligible disputes.  The CC anticipates this should be in place by the end of 2023.  Once that is established, wholesale customers and suppliers may refer any dispute to that scheme. 

This article intends only to provide a broad outline of the currently-ongoing implementation of the CICA and the GSC.  If your business is associated in any way with the grocery industry, we would recommend seeking legal advice on the impacts of this new legislation on your business.