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.

Stronger regulatory options - fact sheet

The Commission has published a factsheet outlining the regulatory options that will be considered as part of the inquiry. These are the options made available to us under the Grocery Industry Competition Act 2023.

Stronger regulation may be necessary or desirable to promote competition which benefits New Zealand consumers. The regulatory options are:

• Establishing a wholesale framework;
• Implementing a wholesale code;
• Requiring RGRs to provide wholesale on non-discriminatory terms ('like for like' terms to all customers); and
• Requiring RGRs to supply wholesale customers on specified access terms.

The factsheet has more information about each option and how they couldwork in practice. It is available for download.

We want to hear from you

We invite all interested parties to review and cross-submit on the submissions received on the Preliminary Issues paper.

Cross-submissions can be emailed to grocery.regulation@comcom.govt.nz with ‘Grocery Wholesale Supply Inquiry – Cross-submission’’ in the subject line.

The content of cross-submissions should only focus on matters raised in submissions.

Cross-submissions are due by 5pm on Wednesday 11 December 2024.

We intend to publish all cross-submissions on our website, unless you indicate to us that your cross-submission, or parts of it, are confidential. When providing a cross-submission that is not labelled as confidential, please confirm in the cover email that you are happy for that cross-submission to be published on our website. If it is necessary to include confidential material in a submission, the information should be clearly marked, and both confidential and public versions of the cross-submission should be provided and clearly labelled.

While the scope of the cross-submissions are limited to issues raised in submissions on the Preliminary Issues paper consultation, if you would like to raise any other or emerging issues regarding the wholesale regime or the Inquiry please contact us on grocery.regulation@comcom.govt.nz.