The Commerce Commission is warning all trade associations that they should not discuss pricing issues.

The Commission's Commerce Act Manager, Jo Bransgrove, said that associations and their members must be aware that the Act prohibits competitors entering into arrangements about pricing issues. This applies to much more than just the final price. Timing of price changes, discounts, commission rates, mark ups and all other parts of prices are covered. The buyer and seller can discuss these issues, but competitors must not.

A key point for members of trade associations is that if the association enters into an arrangement, then under the Act all the members are considered to have entered into the arrangement.

The warning follows a Commission's investigation into an arrangement between the Retail Merchants Association (RMA), Foodstuffs (NZ) Ltd and the National Association of Retail Grocers and Supermarkets of New Zealand (NARGON) concerning a price change moratorium over the Christmas period.

The arrangement gave rise to an expectation that during the Christmas period, suppliers to the retail grocery trade would not change wholesale prices or launch new products.

Ms Bransgrove said that the Commission has no concern with such arrangements being discussed independently between a retailer and a supplier. Its concern was that the arrangement was reached jointly by retailers who compete with each other, and this is prohibited by the Act.

The Commission has sent warning letter to the members of the RMA and NARGON and Foodstuffs advising them that their behaviour was likely to be at risk under section 30 of the Act, which prohibits price fixing.

In this case there is no evidence of any effect on competition in the market or detriment to consumers. Supermarkets and grocers continued to individually set their own retail prices, and promotions of goods also continued.

The Commission accepts that wholesale price changes create considerable work for retailers, and the purpose of the moratorium on wholesale price changes was to avoid staff-intensive tasks during the busiest period of the retailing year. During the year suppliers typically give at least two weeks notice of a price change to allow retailers to prepare for it.

However, while this arrangement may have had no effect on consumers, it highlights a concern the Commission has about all trade associations. They are a venue for competitors to meet and discuss industry issues. They have important roles to play in their industries, but they must be very careful to ensure that they do not become a venue for price fixing or any other anti-competitive behaviour.

The members of the RMA and NARGON and Foodstuffs co-operated fully with the Commission and have given an assurance similar arrangements will not occur in the future. The Commission does not intend to take court action against any members of the associations or Foodstuffs.

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