Wholesale Supply Inquiry

The First Annual Grocery Report showed that the wholesale regime is working for a small group of grocery retailers, but there are some fundamental issues in the wholesale market that cannot be addressed under the regime’s current settings.

At a high-level, these relate to:

• the low volume of sales through the wholesale regime;
• the major supermarkets’ wholesale pricing models;
• other retailers’ access to rebates, discounts and payments (via the major supermarkets’ offers and direct supply);
• other retailers’ access to top-selling retail products; and
• the effectiveness of major supermarkets’ systems and processes for wholesale supply.

Based on these issues, the Commission is concerned that in its current form, the wholesale regime is not working well for the broader grocery industry and is unlikely to be promoting the purpose of Part 3 of the Grocery Industry Competition Act 2023 (the Act).

Part 3 of the Act is intended to enable wholesale customers to “have reliable and cost-effective wholesale supplies of groceries” and “have reasonable access to the benefits of the scale, and the efficiency, of operations of regulated grocery retailers.”

The First Annual Grocery Report showed that:

• wholesale offerings by RGRs do not appear to be consistent with a competitive wholesale market;
• wholesale customers do not appear to have reasonable access to the benefits of the scale and efficiency of the RGRs; and
• wholesale customers do not appear to have reliable and cost-effective access to wholesale supplies of groceries from RGRs or via direct supply.

This means that further intervention may be necessary to achieve the intended benefits of the wholesale regime, for both the wider grocery industry and New Zealand consumers.

If we identify issues that can be addressed using our powers before the Inquiry is complete, we may decide to take action. For example, by establishing a wholesale code and/or require one or more RGRs to prepare a wholesale framework.

An Inquiry under section 56 of the Act enables us to consider if additional regulatory tools are needed and if the legal requirements for additional regulatory intervention are met, and to confirm what that intervention should look like.

We anticipate the Inquiry will be completed in mid-2025.

We want to hear from you

In October 2024 we will release an Issues Paper that will summarise our current understanding of the issues affecting the wholesale regime and the opportunities we see to address them. We welcome your feedback on these issues and opportunities.

In the meantime, if you have any feedback on the Terms of Reference for the Inquiry, or would like to be included in our engagement for the Inquiry, please contact us on grocery.regulation@comcom.govt.nz with the subject line “Wholesale Supply Inquiry”.

Further information about how to make a submission on the Issues Paper will be provided in October.