Countdown and Pak’nSave supermarkets in Napier. Photo / Warren Buckland
The Government wants to give the Commerce Commission new intelligence-gathering powers to prevent turf wars between supermarkets that limit competition.
The Committee on Economic Development, Science and Innovation of the Parliament recommended giving the Commission these powers by adding clauses to the Trade (Food Sector Agreements), which should have its second reading in the Parliament this week.
The Minister for Trade and Consumer Affairs, David Clark, supports the update of the Bill, which is intended to prevent supermarkets from buying land or dictating the terms of the lease to block their competitors from entering a neighborhood
The new proposal is to allow the Commerce Commission to ask a grocer to give information about contracts, arrangements, understandings, or pacts that make it difficult for competing retailers to set up shop.
The purpose of these powers is to help the Commerce Commission enforce the new rules.
Clark said he has written to the Commission clarifying that he expects to make “proactive use of its monitoring powers” under the Bill, rather than just using the powers when it suspects there is a problem. .
Under the proposal, the Commission can only use its information-gathering powers “for the purpose of assessing compliance with certain provisions of the Trading Act 1989 and the Fair Trading Act 1986”.
Clark pointed to Ponsonby as an example of where restrictive covenants currently mean the Auckland suburb is served by just one food supplier.
“Supermarkets have indicated that they are committed to abandoning restrictive covenants and leases, which is a big step in the right direction,” Clark said.
“We, however, need to ensure that this process maintains its momentum, and that the restrictive covenants are relegated to the history books for good.
“This legislation tackles a root cause of competition problems in the food sector, and ensures that the Commerce Commission has the right powers to help enact change.
“It also sends a signal to future competitors that access to suitable land should no longer be a barrier.”
This change is one of a number that the Government is doing on the back of a study by the Trade Commission that recommended the action it could take to improve competition in the food sector.
The Government is also working to provide a regulatory backstop to ensure that supermarket companies allow competitors to buy goods from their wholesale arms.
“We are also making rapid progress on the mandatory code of conduct, which will go out for public consultation in the coming weeks and the unit pricing scheme which is already out for feedback,” Clark said.