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Countdown happy at being exonerated under Commerce Commission inquiry

Thursday 20th November 2014

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Progressive Enterprises managing director Dave Chambers said he felt exonerated by the outcome of a Commerce Commission inquiry into anti-competitive behaviour by Countdown supermarkets, which found nothing to warrant prosecution.

Former Labour Party MP Shane Jones used the protection of Parliamentary privilege in February to accuse Countdown, which is owned by Progressive and ultimately by Australian-based Woolworths, of bullying behaviour against its New Zealand suppliers. Progressive has consistently denied the accusations.

The competition watchdog’s report, issued this morning, suggests much of the concern among suppliers to supermarkets occurred earlier this year when Progressive Enterprises changed its strategy to try to resist price increases from suppliers by locking in existing prices where it could and making greater use of its sales and margin data to assess supplier performance.

Chambers said they’re obviously pleased with the outcome and pleased the whole issue was finally over.  “The outcome is what we said it would be earlier this year,” he said.

The Commerce Commission did warn supermarkets to take more care in the way they communicate with suppliers and that discussions with competitors "carry significant risks for all involved."

It found 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."

Chambers said they’d follow the advice although the retailer already did try to communicate well with suppliers.

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 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.

Chambers said earlier this year that the chain, which has around 44 per cent share of the New Zealand grocery market, had lost significant revenue and market share since the accusations were made. He also went on the offensive, claiming Kiwis were being ripped off by multi-national companies charging substantially more for their products here than elsewhere.

At the time the New Zealand Food & Grocery Council, which represents the interests of manufacturers and suppliers, said Chambers’ claims on pricing seemed to be a diversionary tactic from the issues under ComCom investigation.  It said it would comment shortly on the outcome of the commission’s inquiry.

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