Foodstuffs owns Pak'n Save and New World. Photo: RNZ
The Commerce Commission has given Foodstuffs North Island a warning over a likely breach of grocery competition law and asking suppliers to bring forward any complaints about unfair treatment.
The Grocery Commissioner Pierre van Heerden said the Grocery Industry Competition Act required retailers to deal with suppliers in good faith at all times.
"I'm concerned that this follows a pattern of behaviour that has been present in the industry for decades," he said.
"This behaviour has been enabled for so long due to the significant power imbalance between the major supermarkets, who hold the vast majority of the market, and suppliers, who have limited bargaining power in comparison."
While the Commerce Commission issued only a warning, van Heerden said further action would be taken if more examples came to light.
"Foodstuffs North Island appears to have obstructed and delayed a supplier request by acting in ways that we believe were uncooperative and unreasonable," van Heerden said.
"In this instance, based on the evidence we have, we decided a warning was the right response."
He said Foodstuffs North Island category manager that acted as the main point of contact for the supplier, was also investigated regarding their role in the matter and given a warning.
"Suppliers are reliant on their relationships with the retailers' commercial teams, so the staff in these roles within the supermarkets hold a lot of power. Any behaviour that weaponises this power imbalance is unacceptable," he said.
"The major supermarkets have a responsibility to make sure their staff are properly trained. They need to make sure their staff follow the rules and deal with suppliers in good faith."
He said further changes were proposed to the Supply Code which would provide more scrutiny and clarity about what was acceptable behaviour.
"Our supplier survey showed that 37 percent of suppliers reported their interactions with Foodstuffs North Island as negative or very negative.
"This is significantly higher than suppliers' ratings for Woolworths and Foodstuffs South Island, at approximately 20 percent."
Van Heerden said the supply code was designed to protect small and medium sized suppliers.
"We really appreciate where suppliers have come forward to tell us about issues so we can take action - like in this case where we heard directly from the supplier involved," he said.
The warning letter can be found on the Commission's website.
Foodstuffs North Island has been asked for comment.
