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Supermarket inquiry finds no breaches by Countdown

Thursday 20th November 2014

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The Commerce Commission inquiry into anti-competitive behaviour by Countdown supermarkets, alleged by former Labour Party MP Shane Jones, has found nothing to warrant prosecution, although it warns supermarkets to take care in the way they communicate\ with suppliers and that discussions with competitors "carry significant risks for all involved."

The competition watchdog's report, issued this morning, suggests much of the concern among suppliers to supermarkets occurred early this year when Progressive Enterprises - operator of the Countdown supermarket chain - changed its strategy to try to resist price increases from suppliers by locking in existing prices and "not accepting price increases in the first instance, and making greater use of its sales and margin data to assess supplier performance."

The inquiry did find some evidence of confusion or misunderstanding, abetted by ambiguous communication by Progressive/Countdown, provoking the warning that "ambiguity in business communications should be avoided as it can lead to misunderstanding that can place you at risk of breaching the law."

There was no evidence found of any communication between Progressive and its competitors, mainly the New World and Pak'n'Save supermarkets operated by the Foodstuffs cooperatives.

Jones's allegations were made in February, under cover of parliamentary privilege, and came before his unexpected resignation as an MP to become a roving fisheries ambassador in a move seen as a coup for the National Party-led government, given his strong political performance.

Jones alleged Countdown's tactics amounted to "corruption, racketeering and blackmail" and likened its behaviour to the TV crime series family, the Sopranos, allegations that Countdown denied at the time.

The chief executive of the commission, Brent Alderton, said in a statement that "we do not consider that any of the conduct we investigated was unlawful and our investigation is now closed. We do not intend to take any further action."

 

The commission received evidence from some 90 complaints in the course of the inquiry, leading to investigations into potential breaches of the Fair Trading and Commerce Acts.

BusinessDesk.co.nz



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