The Commerce Commission will be filing legal proceedings against Foodstuffs North Island and Gilmours over allegations of cartel conduct.
The Commission said it would “shortly” file civil proceedings against the two companies for alleged breaches of the Commerce Act and the Grocery Industry Competition Act. Gilmours is owned by Foodstuffs North Island.
Foodstuffs North Island has denied any unlawful conduct.
It followed an investigation by the Commission into agreements the companies entered with a national grocery supplier regarding the supply of products to a hospitality customer.
The supplier and customer both had “considerable volumes of business” with Foodstuffs North Island and Gilmours.
“When FSNI/Gilmours discovered the supplier and customer had established a direct trading relationship, they persuaded the supplier to re-route that business through them,” the Commerce Commission said.
Commerce Commission chairman Dr John Small said the Commission believed the companies had engaged in cartel conduct and breached the Commerce Act.
Cartel conduct is when two or more businesses agree not to compete with each other. This could include price fixing, allocating customers, rigging bids or restricting the output of goods and services.
“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,” 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.”
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The commission also believed the companies obstructed the supplier’s ability to sell groceries to the customer in question and did not deal with the supplier in good faith, which breached GICA.
“The Grocery Supply Code was introduced to address the power imbalance between the major supermarkets and their suppliers,” Grocery Commissioner Pierre van Heerden said.
“The major supermarkets are the largest customers for most grocery suppliers. 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.”
Following the Commission’s statement this morning, a Foodstuffs North Island spokesperson said: “Foodstuffs North Island and our stores are committed to complying with all our regulatory obligations, and we co-operated fully with the Commerce Commission throughout their investigation of this matter.”
The business “strongly” denied any unlawful conduct.
“As this matter will be before the Court in due course, it would not be appropriate to comment further at this time.”
Foodstuffs North Island was issued a warning earlier this month for the treatment of a supplier that likely breached the Grocery Industry Competition Act 2023.
