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New supply code prohibits abuse of power by supermarkets over suppliers
Supermarket duopoly must pay on time and treat suppliers fairly
Penalties include the greater of 3% of turnover or $3 million for breaches of new code
Grocery Commission to act as watchdog to enforce new rules
Big supermarket chains face stiff fines for not treating small suppliers fairly, thanks to the Labour Government’s new
Grocery Code of Conduct
, says Commerce and Consumer Affairs Minister Duncan Webb.
“The big supermarket chains have not been treating local suppliers fairly – they have been taking advantage of their dominance and imposing unreasonable terms and conditions. We are calling time on their poor behaviour,” Duncan Webb said in launching the code in Christchurch today.
“The new code requires large corporates to do things like pay on time, have plain-English supply contracts and deal with small companies in good faith.
“It’s entirely reasonable and hardly too much to ask. Local suppliers have been stretched for a long time, and that’s stifled innovation and the development of our food supply chain.
“Establishing this Grocery Code of Conduct is another critical step in the Government’s reform of the grocery sector to make it fair for consumers and suppliers.”
Agreed to this week, the code will initially apply to the two big supermarket chains, Woolworths New Zealand (including the Countdown Brand) and Foodstuffs North Island and South Island (including Pak ‘n Save, New World and Four Square).
The maximum penalty for companies breaching the code is the greater of 3 per cent of turnover, the value of any commercial gain from the breach, or $3 million. Individuals face fines up to $200,000.
The code comes into force on 28 September and will be monitored and enforced by new Grocery Commissioner Pierre van Heerden, whose position was established in July.
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