The Labour Party says a mandatory code of conduct is needed for supermarkets, following Progressive Enterprises being cleared of anti-competitive behaviour despite around 90 complaints.
The Commerce Commission released its report into the allegations about the behaviour of the company toward its suppliers today, following an official complaint by former Labour MP Shane Jones in February.
Chief executive Brent Alderton says the Commission "does not believe that Progressive has breached any of the laws it enforces". No further action will be taken following the investigation.
The Commerce Commission enforces the Fair Trading Act and the Commerce Act.
Progressive managing director Dave Chambers says the company is pleased with the outcome and that the investigation is over.
"The shadow of these false allegations has been distracting but what’s really important is that our team has risen to the challenge and worked hard to win back the confidence of our customers," he says.
He maintained the supermarket negotiated in a competitive environment, which were always in good faith, and fair and transparent.
If there were improvements which could be made, the company would look into it especially if it benefited customers and suppliers.
Labour's commerce spokesman Clayton Cosgrove says though the report found no technical breaches of the law, the number of complaints indicates there are serious issues.
"The Commission was only able to look at the letter of the law. In Labour’s view the law is not strong enough," he says.
The party has drafted legislation for a mandatory code of conduct which would be overseen by an independent adjudicator.
It plans to release the draft next week and offered it to the Government as a solution to the problems.
Mr Cosgrove says countries like Australia and the UK already have codes of practice.
The New Zealand Food and Grocery Council is unsurprised by the Commission's findings "given New Zealand's current framework".
In a statement, the council says the discussion will now turn to a code of conduct, or set up laws which prosecute "unconscionable dealings".
It stands by information from its members Countdown asked some suppliers for payments relating to trading in previous periods.
Just because the Commission found no breaches of the law "doesn’t mean business behaviour that New Zealanders would deem unfair has not occurred," the council says.
It warns the duopoly in the supermarket sector should ensure buyer power is not abused in treatment of suppliers, the New Zealand food industry or consumers.
"Abuse of buyer power can lead to higher prices and less choice as smaller suppliers disappear."
Progressive questions 'damage' of privilege claims
Mr Jones first raised the allegations under privilege in the House earlier this year, claiming Countdown owner Progressive Enterprises was blackmailing suppliers by threatening to blacklist products if they didn't pay what they owed.
He defended his choice of using the "cloak of parliamentary privilege", saying it would have been difficult for anyone to take the company on without it.
The now Pacific Economic Ambassador, didn't mince his words when it came to describing the alleged behaviour, labelling it "the Countdown shakedown" and "supermarket fascism".
"They have been ordered to meetings with managers of the Countdown supermarket chain," he said at the time.
"They are being told by the Australian-owned supermarket, 'our profit margin didn't suit the shareholders' expectations last year, we want more profit out of you'.
"They are demanding of Kiwi businesses payments, back-dated cheques, and recompense for the losses the supermarkets assert they suffered last year.
"And if they don't pay the cheques, they are being told: no shelf space into the future... and if you breathe one word of this, we will blacklist you permanently."
He argued for suppliers to have anonymity while giving evidence to the inquiry to avoid the fear of retribution.
Mr Chambers took a swipe at the use of parliamentary privilege, saying he hopes lessons could be learned "about the damage false allegations can cause".
The investigation looked into five areas – retrospective payments, deductions from supplier invoices, conduct affecting retail markets, conduct affecting wholesale markets, and conduct concerning preferential treatment of Progressive's transport subsidiary.
The Commission interviewed suppliers and Progressive as well as looking into documents including meeting notes and says it managed to talk to everyone it needed to for its inquiry.
Mr Alderton said the supermarket industry is important to New Zealand, and is vital it competes in a competitive way.
"We do not consider that any of the conduct we investigated was unlawful and our investigation is now closed," he said.
However, the Commission says the investigation highlighted two areas which commercial parties to be wary of.
The first is "ambiguity in business communications" should be avoided because it could lead to misunderstandings that can put companies at risk of breaching the law.
Secondly, exchanging information about competitors' future behaviour, or discussing supplier interactions "carries significant risk for all involved".
The Government also backed the inquiry.
The Australian-owned supermarket chain denied the claims.
Read more
- Jones slams corrupt Countdown
- Countdown suppliers 'need anonymity'
- Supermarket denies blackmail allegations
3 News
source: newshub archive
