The Commerce Commission is warning all industries that manufacturers, wholesalers and other suppliers should not attempt to control independent retailers' prices.

The Commission's Commerce Act Manager Jo Bransgrove today praised New Zealand Breweries Limited for responding immediately to the Commission's concerns by removing a maximum pricing provision from its terms of trade agreement for independent retailers.

Ms Bransgrove said that New Zealand Breweries co-operated with the Commission and the Commission accepts that what it considers a breach of the Commerce Act does not appear to have been deliberate.

"The brewery's actions provide a warning and an example for all suppliers," Ms Bransgrove said. "The Commerce Act is not simple and suppliers should get legal advice if they are unsure about how their corporate structure might affect their ability to influence retail prices, but if any problem occurs, then fix it quickly.

"It is fundamental to healthy competition that prices are controlled by consumer choice and competition among retailers and suppliers," Ms Bransgrove, said, "and not by arrangements between competing market participants."

This applies to all industries, but is particularly important where there are few major players in a market.

"Brewing is an industry the Commission pays particular attention to because two large companies control the vast majority of beer production in New Zealand," Ms Bransgrove said.

The Commission has accepted a settlement with New Zealand Breweries that removes a maximum price provision from its terms of trade agreement for participating independent retailers.

Because New Zealand Breweries and the retail liquor chain Liquor King are both owned by Lion Nathan Limited, Liquor King are deemed to be a party to any arrangement entered into by New Zealand Breweries. When the arrangement includes an element concerning retail prices, this raises the issue under section 30 of the Commerce Act of competitors entering agreements about price.

The initial impact of the restrictions would have been the setting of maximum prices at which Lion products could have been sold by participating retailers, but the future consequence could have been the distortion of competition at retail level.

"The Commission's aim was to prevent possible harm to competition in the future," Ms Bransgrove said. "We are pleased that New Zealand Breweries has co-operated to achieve this.

"It is best that potential problems do not arise at all. But second best is to remove the problem before it does any harm - prevention is far better than cure."

Media contact: Commerce Act Manager Jo Bransgrove

Phone work (04) 498 0958

Communications Officer Vincent Cholewa

Phone work (04) 498 0920

Commission media releases can be viewed on its web site www.comcom.govt.nz