The Commerce Commission has announced it will initiate legal action against Foodstuffs North Island and its subsidiary, Gilmours, for alleged violations of both the Commerce Act and the Grocery Industry Competition Act.
The allegations involve cartel conduct, which claims that the companies persuaded a supplier to channel business through them, blocking the supplier from having a direct trading relationship with and supplying products to a hospitality customer.
“When FSNI/Gilmours discovered the supplier and customer had established a direct trading relationship, they persuaded the supplier to reroute that business through them,” the Commerce Commission said.
ComCom said these actions may have breached both the Commerce Act and the Grocery Industry Competition Act by restricting competition and failing to deal with suppliers in good faith.
“We take allegations of cartel conduct very seriously. Cartel conduct harms consumers through higher prices or reduced quality, and it harms other businesses that are trying to compete fairly,” Commerce Commission Chair Dr. John Small said.
“In this instance, the supplier wanted to provide a competitive supply channel, but this was stopped by the agreement with FSNI and Gilmours.”
“We do not tolerate this kind of behaviour and will not hesitate to take court action, where appropriate.”
Meanwhile, Foodstuffs North Island has denied any allegations of unlawful behaviour.
“Foodstuffs North Island and our stores are committed to complying with all our regulatory obligations, and we cooperated fully with the Commerce Commission throughout their investigation of this matter,” a Foodstuffs North Island spokesperson said.
Grocery Commissioner Pierre van Heerden emphasises the significance of the Grocery Supply Code, which was introduced to address the power imbalance between large supermarkets and their suppliers.
“The major supermarkets are the largest customers for most grocery suppliers,” Van Heerden said. “This creates a reluctance for suppliers to call out bad behaviour or push back on the supermarkets for fear of damaging relationships or losing access to supermarket shelves.”
“The Commission is acutely aware of the risk suppliers may face coming forward and has ways to protect their identity and business. We have anonymous reporting tools for cartels and GICA and encourage anyone concerned to use these ways of contacting us.”