ComCom digs into supermarket delisting
The Commerce Commission has warned Woolworths New Zealand for what it believes is a breach of the Grocery Industry Competition Act following a review of the major supermarkets’ delisting processes.
“The possibility of products being removed from shelves is a significant weight on suppliers that can reinforce the power imbalance between major supermarkets and smaller suppliers,” Commerce Commission Head of Groceries Alice Hume says.
“Woolworths, Foodstuffs North Island, and Foodstuffs South Island hold 82% of the grocery market in New Zealand and so are the main avenue for most suppliers to sell products. Losing access to such a large portion of the market can effectively signal the end of a smaller supplier.
“The risk of losing market access can lead to suppliers accepting conditions that aren’t beneficial to them, and a lack of trust about how supermarkets make these decisions.
“We’ve heard concerns directly from suppliers about the ongoing power imbalance and the major supermarkets’ processes when delisting products,” Dr Hume says.
The Grocery Supply Code (the Code) places obligations on the major supermarkets when undertaking range reviews to decide which products are stocked. As part of these reviews, products may be ‘delisted’ as the supermarket chooses to no longer stock them.
The newly outlined process gives suppliers clearer rights to challenge delisting decisions and more transparency through their interactions with the major supermarkets. Any breaches of the Code are breaches of the Grocery Industry Competition Act.
The Commission reviewed the range review processes of all the major supermarkets to make sure they were meeting their obligations under the Code. Through this process we identified and investigated instances where we considered Woolworths New Zealand was at risk of not meeting their obligations. After this investigation we issued Woolworths New Zealand with a Warning for what we believe is a likely breach of the Grocery Industry Competition Act, noting that only a court can determine if a breach has occurred. Woolworths have since updated their processes to meet their obligations.
“The Code plays a crucial role in levelling the playing field between the major supermarkets and smaller suppliers, so we take compliance very seriously,” Dr Hume says.
“We’ve recently reviewed and updated the Code to make sure that suppliers are protected from retaliation when they raise concerns about or challenge the major supermarkets on their compliance with the Code.
“Range reviews continue to be an area of focus for us at the Commission, with previous and ongoing investigations.
“We ask suppliers to come forward if they have any concerns around delisting or any other potentially unfair treatment from major supermarkets. You can contact the Commission directly, or through the anonymous reporting tool on our website,” Dr Hume says.
Background
The new Code will come into force on the later of 1 May 2026 or when either or both of regulations 9 and 10 of the Regulations, which prescribe the level of penalties applying to contraventions of the Code, are first revoked or amended by the Minister.