Fast, not furious: New Zealand food sector welcomes ‘expeditious’ development of new Grocery Code of Conduct

05-Apr-2023 - Last updated on 05-Apr-2023 at 05:51 GMT

The food and grocery sector in New Zealand has acquiesced for the government to develop the first full version of the new Grocery Code of Conduct to speed up introduction. ©Getty Images

The food and grocery sector in New Zealand has acquiesced for the government to develop the first full version of the new Grocery Code of Conduct to speed up introduction, but has stressed that its administration will subsequently need to move out of its control.

After years of debate over the introduction of a local Grocery Code of Conduct, the bill to introduce this was finally introduced to parliament late last year, with its first reading formally taking place on November 24 2022.

The select committee for this bill prepared a follow-up report on the bill which was recently submitted to parliament in March 2023 with several updated recommendations – one of which was for the minister in charge, Minister of Commerce and Consumer Affairs Dr Duncan Webb, to develop the first version of the code.

Dr Webb recently assumed office on 1 February 2023, taking over from predecessor David Clark who was a major proponent and initial in-charge of the bill.

From an industry standpoint, it is not common for industry leaders to be willing to put control over such a major industry influencing factor such as this bill into government hands, but this time it appears that the local food and grocery sector believes that the faster the bill is developed and introduced the better.

“The legislative process doesn’t always move this swiftly, and the commitment to having the law in place before the election indicates the priority [previous] minister David Clark has given to improving this situation,” New Zealand Food and Grocery Council (NZFGC) Chief Executive Raewyn Bleakley told FoodNavigator-Asia.

“We are pleased with the recommendations made around the grocery supply code [in] the bill as reported back to Parliament on March 22 [as these changes] made to the original bill will improve competition and behaviour in the grocery market.

“Amongst these, we welcome having the minister develop the first version of the code so it is ‘introduced expeditiously’ [but] the Commerce Commission be the one to administer the code in the long term.

“We do also agree with having the minister consult before recommending a code, [and find it important] to ensure that the code captures all the related parties of a regulated grocery retailer.

“All these points are vital, and it’s great the committee has cleared the way for the Minister to move fast on getting the code in place.”

The select committee’s report had highlighted several potential loopholes that needed to be resolved before the bill was finalised.

“We were concerned about potential loopholes in a grocery supply code [and] noted that as the bill stands it would give the minister the ability to recommend the creation of a grocery supply code,” said the committee via its report.

“We consider that the Commission would be a more appropriate entity to administer the grocery supply code in the long-term [as] it will have detailed knowledge of the grocery industry and the necessary resourcing to perform its regulatory functions.

“It would be better suited to both reviewing a grocery supply code and making any changes to a grocery supply code by determination [but] we do also consider that the minister should make the first version of the code to allow it to be introduced expeditiously.”

Fast dispute resolutions

Another major area highlighted by the committee was to ensure that any disputes between food and beverage product manufacturers or suppliers and the relevant grocery retailers be resolved speedily, so as not to put the former at a disadvantage.

“We note that the retailers may be able to absorb the time-cost of dispute resolution better than smaller suppliers or wholesale customers [so] this could reduce the effectiveness of the dispute resolution scheme,” the committee added.

As such we recommend amendments to the bill [that allow for] disputes to be concluded within ‘a period of time prescribed by regulations’ - This would mean that all disputes referred to the scheme would need to be resolved within 25 working days unless extended by the parties, the adjudicator, or the dispute resolution scheme provider.

“We consider that 25 working days is an appropriate amount of time for a commercial dispute to be resolved [and] that timeliness is essential for dispute resolution, especially in the grocery industry.”

Bleakley noted that this was also good news for the local industry as a whole.

“This is a huge step towards improving market competitiveness and the level of confidence suppliers have in the business environment they operate in,” she said.