Supermarket and Wholesaler Accused of Cartel Conduct by Commerce Commission

The Commerce Commission has announced its intention to take legal action against two major grocery players, Foodstuffs North Island and Gilmours, over alleged cartel conduct. This development has sparked significant concern within the business community and raises important questions about fair competition in the retail sector.

The allegations center around the companies allegedly blocking a supplier from establishing a direct trading relationship with a customer. Instead, the supplier was reportedly persuaded to route its business through Foodstuffs and Gilmours, effectively limiting the supplier's ability to operate independently.

According to the Commerce Commission, the supplier and the customer both have considerable volumes of business with Foodstuffs North Island (FSNI) and Gilmours. When the supplier and customer attempted to establish a direct relationship, the commission claims that Foodstuffs and Gilmours intervened to redirect the business through their channels.

Dr. John Small, the chairman of the Commerce Commission, emphasized that the commission does not tolerate such behavior. He stated, "Cartel conduct harms consumers through higher prices or reduced quality, and it harms other businesses that are trying to compete fairly." He added that the commission would take court action where appropriate, citing the serious implications of such actions on market fairness.

The Commerce Commission is also filing proceedings against FSNI and Gilmours under the Grocery Industry Competition Act (GICA). The commission believes that the two companies obstructed the supplier’s ability to sell groceries to the customer in question and did not deal with the supplier in good faith.

Grocery Commissioner Pierre van Heerden highlighted the importance of the Grocery Supply Code, which was introduced to address the power imbalance between major supermarkets and their suppliers. He noted that the major supermarkets are the largest customers for most grocery suppliers, which often leads to suppliers being reluctant to challenge unfair practices for fear of damaging relationships or losing access to supermarket shelves.

Van Heerden also mentioned that the commission has ways to protect the identity and business of suppliers who come forward with concerns. He encouraged anyone with concerns to use the anonymous reporting tools available for cartels and GICA.

Foodstuffs and Gilmours have been approached for comment, but no response has been received as of yet.

As this case unfolds, it will be crucial to monitor the legal proceedings and their potential impact on the grocery industry. The actions of the Commerce Commission send a strong message about the importance of fair competition and the need for accountability among major players in the market.