The Grocery Supply Code is not long out of the gate, but the Commerce Commission has kicked off a review of the Code earlier than expected and is seeking industry feedback on its operation and effectiveness.

The Commission is required to complete a review of the Code within two years of it coming into force, which means a deadline of 28 September 2025. The Commission must then provide a report to the responsible Minister as soon as practicable after completing its review.

What is the Grocery Supply Code?

The Grocery Supply Code is part of a bundle of measures introduced under the Grocery Industry Competition Act 2023, aimed at promoting competition and efficiency in the grocery industry for the long-term benefit of consumers in New Zealand. Along with the Code, these measures include the expansion of the Commerce Commission’s regulation, investigation and enforcement powers in respect of the grocery sector, the appointment of a Grocery Commissioner, and the establishment of a dispute resolution scheme to manage allegations of non-compliance with the Act and Code.

The Code itself establishes requirements for the conduct of ‘regulated grocery retailers’ (currently, Foodstuffs North Island, Foodstuffs South Island and Woolworths New Zealand) in dealing with suppliers of grocery products, including rules as to the terms that may or may not be included in grocery supply agreements and enforced against grocery suppliers.

Each of New Zealand’s regulated grocery retailers have updated their standard form grocery supply agreements in light of the Code’s requirements and have received feedback on these agreements from the Grocery Commissioner. Statements made by the Commissioner in April, and again recently following announcement of the Code’s review, indicate that the majority of the agreements issued to suppliers remain unsigned.

ComCom’s request for views

The Commerce Commission has issued a Request for Views paper requesting input from interested parties on the issues that should be considered within its review of the Code. Submissions in response to this paper are sought by 16 September 2024, with cross-submissions accepted until 30 September 2024.

Detailed background to the issues the Commission anticipates being relevant is provided in the Request for Views paper. At a high level, the Commission seeks input on whether the objectives of the Code are being met in practice, both through the content of the Code and the way in which it is being applied to grocery supply agreement negotiations between retailers and suppliers.

Questions posed by the Commission include:

• Is the Code currently effective in supporting its stated objectives?
• Are there any issues with the content of the Code that may be impacting the Code’s effectiveness in supporting these objectives?
• Are there any issues with the way the Code is being operated or implemented that may be impacting its effectiveness in supporting these objectives?
• Are there any opportunities for improving the operation or implementation of the Code to support these objectives?

The Commission appears to be keen to hear from industry participants on their ‘lived experience’ of the Code and consequent negotiations over new grocery supply agreements, and to understand what the practical obstacles are (if any) to establishing a fair, transparent and competitive trading environment.

Talk to the experts

Hayley Miller and her team are on hand if you would like assistance with making a submission in response to the Request for Views paper. You can also reach out to them for practical advice on your rights and obligations under the Grocery Supply Code, or support with drafting, reviewing and negotiating grocery supply agreements. Our competition law expert David Campbell can also advise on broader competition issues relating to the grocery sector.

This article was written by Ashleigh Ooi, Senior Associate, in our commercial, technology and privacy team.