Commerce Commission Takes Legal Action Against Foodstuffs North Island Over Alleged Cartel Conduct

New Zealand's Commerce Commission has taken legal action against Foodstuffs North Island and its subsidiary Gilmours Wholesale, accusing them of engaging in cartel-like behavior that stifles competition in the grocery sector. The move has been welcomed by government officials and political leaders, who emphasized the importance of fair market practices for consumers and businesses alike.

The Commerce Commission has filed civil proceedings against the grocery giants under the Commerce Act and the Grocery Industry Competition Act (GICA). According to the regulator, the companies allegedly entered into a supply agreement that blocked another supplier from competing fairly. This action, the commission claims, undermines the principles of fair competition and negatively impacts both consumers and smaller businesses.

Finance and Economic Growth Minister Nicola Willis expressed her support for the commission's actions, stating that it was important for the regulator to use its prosecution powers when evidence of misconduct is presented.

"I hope that this does send a signal to those who feel like they have been mistreated that where appropriate the Commerce Commission is prepared to take serious action," she said.

Willis also emphasized the importance of New Zealand's laws against cartel behavior, noting that such actions ultimately lead to higher prices for consumers.

Prime Minister Christopher Luxon praised the investigation, calling it "fantastic" and highlighting the government's commitment to fostering competition in the supermarket sector.

"We don't want to see that in New Zealand. I'm proud they're doing that work. It's exactly the issue that we're raising, we want competition in the supermarket sector, there's no excuses for any of that behavior whatsoever," Luxon said.

Meanwhile, Labour leader Chris Hipkins called the allegations "really concerning" and stressed the need for more competition in the grocery industry.

"I think it's well and truly time we saw more competition in that sector. I'm open to any conversations about how we get more competition in that area," he said.

The government has outlined plans to improve competition in the supermarket sector as part of its quarterly action plan, and ACT leader David Seymour echoed the call for more competition.

"Until we address the competition problem we won't see lower prices, no matter how many different commissioners there are watching over the sector," he said.

In response, Foodstuffs North Island denied any wrongdoing, stating that it fully cooperated with the Commerce Commission during its investigation.

"Foodstuffs North Island and our stores are committed to complying with all our regulatory obligations, and we co-operated fully with the Commerce Commission throughout their investigation of this matter," a spokesperson said.

"We strongly deny any unlawful conduct. As this matter will be before the court in due course, it would not be appropriate to comment further at this time."

The Commerce Commission's chair, John Small, reiterated the commission's stance, stating that cartel conduct harms both consumers and businesses.

"We do not tolerate this kind of behavior and will not hesitate to take court action, where appropriate," he said.