Commerce (Supermarket Adjudicator and Code of Conduct) Amendment Bill

I move, That the Commerce (Supermarket Adjudicator and Code of Conduct) Amendment Bill be now read a first time. I nominate the Commerce Committee to consider the bill. I developed this bill to address a real problem that is common knowledge in the supermarket and grocery industry. At present just two big supermarket chains control over 90 percent of the grocery market in New Zealand. This means that small local food suppliers, the people in New Zealand who grow and produce the food that we eat, can struggle to access that market. This bill provides a very simple regulatory measure that will create a more balanced playing field for the long-term benefit of both consumers and local suppliers. I want to start by acknowledging the work of former Green MP Sue Kedgley, who devoted significant time and energy in this area. This bill picks up and is built on the work that was done by Sue.

So what does the bill do? It requires the appointment of a supermarket adjudicator, who is then tasked with developing a code of conduct for supermarkets in consultation with all the key stakeholders, and then with receiving and dealing with complaints under the code. The Ministry of Justice New Zealand Bill of Rights Act assessment report has found that the bill is consistent with the rights and freedoms in the New Zealand Bill of Rights Act. It also gives a very clear description of the bill’s intent and purpose, which I will repeat here: “The purpose of the bill is to promote competition in New Zealand markets by introducing measures to prevent or mitigate restrictive trade practices for the long-term benefit of consumers and suppliers.”

The bill’s aim is entirely consistent with existing regulatory purposes in New Zealand competition law, such as the Commerce Act and the Telecommunications Act, which are focused on making sure that markets work properly and fairly. That principle is very important for most New Zealanders. We go about our daily lives, buying and selling, feeding our families. We place trust in the system that we are getting a fair deal and that we are not being ripped off. A competitive market can help provide us with the choices that we want as consumers. The presence of competition helps ensure that retailers are honest. But when a market lacks competition and when it is dominated by two large players, as is the case with supermarkets in New Zealand, then there is a strong case for the Government to step in and ensure that it is regulated at the appropriate level, which is what my bill provides for.

As I have said, the problem is that over 90 percent of the grocery retail market is controlled by just two companies in New Zealand, and this makes us one of the most concentrated markets in the OECD when it comes to groceries—in fact, one of the most concentrated in the world. What this means is that there is a very unequal power relationship between the big supermarkets and the local foodstuff producers, who employ people in our regions and make great food. If they want their food to be on the supermarket shelf, it can be very hard to achieve that.

Different suppliers face different issues with different supermarkets, but across the board there are people who say that supplying their product to supermarkets is very difficult. This is because one supermarket can dictate the terms of an agreement to a supplier, and if the supplier does not like the terms, the only other option is to go to the other supermarket, which can dictate pretty much the same terms. The fact is that supermarkets have unfair market power, and this can result in restrictive trade practices. They can buy produce at a low price and sell it at a high price. There has been conflicting evidence about exactly what retail margins there are for fresh produce, and it is likely that one of the supermarket adjudicator’s first tasks would be to get to the bottom of this and make sure that everyone is getting a fair deal.

Suppliers have also told me about other problems, such as being forced to reveal all recipes and processes—not just the ingredients on the label—to a supermarket, which gives up a supplier’s intellectual property and competitive edge. I have heard of supermarkets dumping suppliers or their product at very short notice, leaving the suppliers holding large amounts of packaging and ingredients with no way to sell them. I have heard about unfair behaviour around selling products on special, with suppliers paying the extra costs for advertising and the full discount not being passed on to customers.

I also want to say that I have heard from supermarkets too. The other side of the problem is the power wielded by the massive multinational grocery suppliers, which can, in fact, be turned against supermarkets. The supermarkets might sometimes be seen as the bad guys when it is really the big overseas food companies that are calling the shots. When so many of the products on the supermarket shelves come from just a handful of multinational food companies, they can potentially decide their market power against the supermarket. A code of conduct and a supermarket adjudicator could address this too. The adjudicator could be tasked with addressing unfair market manipulation and restrictive practices, no matter who is responsible.

My bill requires all relevant parties to be consulted and involved in developing the code of conduct to ensure that it is balanced and fair. It does not prescribe the code itself. It is not appropriate for Parliament to decide exactly what the code should say, which is why I have left it to the adjudicator to write the draft code, in consultation with key stakeholders, and then for it to be signed off by the Minister of Commerce and Consumer Affairs. That ministerial sign-off is very important to ensure that no one party has taken over the process and tipped the scales too far one way or the other.

I am sure people remember the Commerce Commission investigation into Countdown last year. Some might say that the inquiry has proved that we already have a system for dealing with restrictive trade practices, but we need to remember that it took massive media outcry, led by Shane Jones, to force that inquiry. Whereas the outcome of the investigation by the Commerce Commission found that no rules or laws had been broken, it does not mean that it found that the current system is working fairly. In fact, it shone a light on the fact that many produce suppliers did actually have serious complaints about how they were treated, but not many wanted to speak out publicly because of the fear of repercussions. That is my experience in talking with suppliers too.

And so what the Commerce Commission showed is that the system is not strong enough to deal with the concerns that suppliers have, and that is why I drafted this bill to strengthen the system and bring in new regulatory tools. The Commerce Commission powers are limited by law, and it has become clear that what the Commerce Commission is allowed to do is not enough. It is not about picking on any particular supermarket; it is about saying that the current regulatory rules are not working, so we need to replace them. I look forward to the debate tonight and support from parties in the House.

Thank you for the opportunity to take a call on the Commerce (Supermarket Adjudicator and Code of Conduct) Amendment Bill. I congratulate the member Mojo Mathers on having her member’s bill drawn from the ballot. Members’ bills are pretty difficult, as some of us know. Some of us have actually had bills in the ballot for many, many years and still have not had the opportunity to have a first reading.

💬 Kanwaljit Singh Bakshi: I got one.

Yes, Mr Bakshi, you were very lucky. You got it first up, but I am still waiting for my turn to actually have my bill read.

This bill is to amend the Commerce Act 1986 to require that a supermarket adjudicator is, in fact, established to resolve disputes between supermarkets and suppliers. I guess the position of this adjudicator would have the power to enforce a code of conduct on supermarkets and force them to pay a levy towards mediation services with suppliers where disputes actually occur. The only thing that I can actually see that will do is increase the prices of products that we buy from supermarkets. I cannot imagine the grocery shops, the supermarkets, saying: “OK, we will actually pay for the levy. We are forced to do so, and we are not going to pass on the cost to the consumers.” That is all I see.

I will take the opportunity now to say that I see no reason for this legislation to continue. I do not see it as necessary. The Commerce Commission already undertakes the functions of a regulatory body tasked with addressing issues of anti-competitive or dominant market powers in New Zealand. In creating a second agency, which Miss Mathers is actually proposing, I just see a doubling of authority. I see that it is completely unnecessary.

This bill is particularly aimed at two leading supermarket-owning companies, Progressive Enterprises Ltd and Foodstuffs (NZ), which provide groceries and goods to hundreds of thousands of New Zealanders all over the country. The Commerce Commission has already reviewed and examined these companies from time to time where concerns have been raised. Most notably, a review was undertaken due to a recent complaint that one of the companies had breached the Fair Trading Act and the Commerce Act, which Miss Mathers alluded to earlier. As a part of its investigation, the Commerce Commission has not said it needs additional tools to undertake its commendable work protecting the markets. The Government believes the Commerce Commission has ample resources to continue its task and does not need what Miss Mathers is actually proposing in her bill.

It has always been an expectation of the Government that all companies deal in a fair and transparent manner. That is what we all want as consumers. This is the case whether there are dominant business partners in the market or smaller low-end suppliers. Where companies do not, the Commerce Commission has the necessary tools and resources to investigate and, if necessary, it can actually take action. It can be seen that the supermarket industry is regulating itself without the need for a mandatory code of conduct. Supermarkets, like any other company, know it is bad business to undertake unsound commercial practices. They know that just as they need to keep consumers happy, they also need to look after their supply lines. They maintain their own standards without the need for further regulation.

Having had a business where we used to supply grocery shops with imported goods from overseas, it is often very difficult to break into that market. Sometimes it seems like climbing Mount Everest, because you are—not you, Mr Speaker, but the business is—in competition with other businesses to break into that supermarket chain, because you want to show that you have got a good product. But the supermarkets have many, many choices. What they do is that often they are in tune with the trends of the market. They know what is popular with consumers, and so they will buy what is popular and what will sell at their supermarkets. I think they will get the best products for the best prices, and often suppliers want to do that, too, because by being on the supermarket shelves they are reaching more people than if they do it themselves from their little, I do not know, shed, manufacturing—

💬 Todd Barclay: What about Four Square?

Four Square? Yes, there is another option. There are many people who actually have choices.

Consumers too have choices. They do not have to go to supermarkets. There are many places in New Zealand where people buy their fresh fruit from the markets. The Grey Lynn market is actually a good example. Farmers markets are actually good examples. Many of us use that option and do not always go to the supermarket. On Monday I wanted to cook fish, and instead of going to the supermarket I went to the local fish shop where I live. I think that was actually really, really good. It is a consumer’s choice to do so. I think the supermarket industry, as I said, regulates itself to provide the best possible produce for the consumers, and I do not believe that this adjudicator is necessary.

Just in addition to the substantial defects in the policy rationale of Miss Mathers, the bill actually contains some fundamental technical errors, I think. What she is actually saying is that the designated supermarket chain and the supermarket could exclude Foodstuffs (NZ)’s 700 owner-operator supermarkets. Under this bill the adjudicator does not have a clear means of efficiently dealing with complaints. So, just to make it very short, I do not think it is necessary. I will not be supporting this bill.

I will say from the outset that Labour Party members will support the Commerce (Supermarket Adjudicator and Code of Conduct) Amendment Bill to select committee because unlike that member who has just spoken, Melissa Lee, who is orbiting a stratosphere that very few New Zealanders have been on, and who proved how out of touch she is, we believe there is a problem. We believe there is a deficiency. We commend the Green Party for bringing this bill to the House. However, we agree that there are some difficulties with the bill, but they could well be addressed in select committee.

Labour drafted before the last election what we would consider a pretty robust and tailor-made piece of legislation. I would have to say to the Green colleague, congratulations on the bill but I think there are some substantial weaknesses in it—for instance, there is no penalty regime in here. The adjudicator is empowered to simply investigate, and if they cannot resolve the issue, as I understand it from the bill, they can require the Minister to invoke their powers under the Act to invite an inquiry. We set out, in our code of conduct—and we have a code of conduct already drafted in a piece of legislation—a penalties regime where the adjudicator should have the power to investigate, publicise information, but also to render penalties. We would say we will support it to select committee. There are some difficulties, I think, also in terms of exclusions. Supermarkets, for instance, so my partner Jane tells me, have a major area of cosmetics. They are excluded from this piece of legislation. They are subject to market power, as are pharmaceuticals, tobacco, greeting cards, and gardening equipment. A number of those issues, I think, need to be refined and addressed.

We will support it to select committee, but I will just say this, in the brief call I have got, to the member opposite. Obviously, the National Party purports to be a friend of business. Ms Lee says that she has a choice when she goes to the grocer’s shop, the fishmonger, or whatever. Obviously, she has never come across, for instance, an entity of people called tomato growers. Tomato growers—

💬 Todd Barclay: Ha, ha!

—and the member from down south, where my old man’s family comes from, does not understand this either. Tomato growers were told by Progressive Enterprises, for instance: “At a certain point in time we will buy your tomatoes for x price.” Tomato growers went there and said: “Well, actually, x price is less than what we can produce for.” The answer was: “Well, son, if you want to be on the shelves next year, that is the deal.” As a result, many of those market gardeners, certainly down in Canterbury and other places, have gone out of business. If you actually read some of the submissions to the Commerce Commission, you would argue there is a difficulty here. The UK, for instance, has a very robust piece of legislation. They have far more grocery chains than New Zealand does and they believe there is a difficulty, there is a problem, and it does warrant an adjudicator. They have a slightly strange system where the adjudicator can recommend penalties but then has to get a Minister to sign them off, which I find quite strange.

I think the costs are, we established, about half a million bucks to three-quarters of a million a year. So the so-called massive cost that is going to be visited on the consumer as the industry pays for it, as that member purports, is bunkum. She has not done her research. She has not done her homework. We would also say that an adjudicator would be part of the Commerce Commission bureaucracy and would have the right—cost recovery—to use the investigative personnel and staff of the Commerce Commission rather than creating, as that member seems to think, some sort of duplication. These are suggestions that we may put to the Green member, if the bill makes it to a select committee, to improve the bill. But the National members simply say: “There is not a problem. We will do nothing about it. We are a friend of the big end of town.” And I wonder what they say to all the suppliers down in Wallacetown, in Gore, in Invercargill, down the young fellow’s way, who have been royally done over—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! The member will resume his seat. Members are not to be addressed in that ageist manner. Clayton Cosgrove—[Interruption] Order! Was that you, Jonathan Coleman, who made that comment?

💬 Hon Dr Jonathan Coleman: It was me.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Stand, withdraw, and apologise.

💬 Hon Dr Jonathan Coleman: Yes, Mr Assistant Speaker. I withdraw and apologise.

That is OK. I am only 46—younger than you, mate. Anyway, as I was saying before I was interrupted by the father of the House, I suspect—

Order! Right, the member’s speech is terminated. Next speaker.

Thank you, Mr Speaker, for the opportunity to speak on this bill. I would also like to congratulate the promoter of this bill. Before I contribute to the bill I would like to congratulate the Hon Clayton Cosgrove on his return to the second row benches, and I hope we will see him in Parliament more, as he was out of action for a long time, and because we used to miss him on the—

💬 Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. Are you going to rule on that?

The ASSISTANT SPEAKER (Hon Trevor Mallard): Not yet, the member is less than 30 seconds—[Interruption] The member will resume his seat. The member is less than 30 seconds into his speech. He was saying something, I think, in relatively good faith, without the degree of cynicism that the member is applying to it. But I am sure the member will get to his speech soon.

Definitely, Mr Assistant Speaker. I was just congratulating my good friend, because we were together on the Commerce Committee, and we have had a good relationship over there. And we did miss him during the—

💬 Kris Faafoi: He speaks very highly of you.

I know, I know. I have seen that in the last 7 years, how much regard he has got for me. Thank you for the opportunity and I think, as my learned colleague Melissa Lee mentioned, that the issue is not that big, as it has been mentioned in this bill. We have got a Commerce Commission that is really looking into these areas. As you remember, last year we had an inquiry, where the Commerce Commission went through all these areas where the issues were raised, and it found nothing in there.

We have got options to go and buy the stuff from anywhere. Particularly, I would like to mention that because I live in South Auckland and my office is based in South Auckland. We have got heaps of shops where we can go and buy different stuff, particularly when we look at vegetables and some of the ethnic grocery foodstuffs. I can assure you that in South Auckland there are more than 50 outlets where we can go, and the prices are very competitive. We do not have to go to the supermarket and buy their stuff. I know there are some areas where there are concerns. But, still, we have got options where we can go and buy the stuff.

I think this bill will be additional bureaucracy. This Government has really worked very hard to reduce bureaucracy and make sure that businesses are able to do their best in their business, promoting their businesses, rather than dealing with bureaucracy. With these words I would like to say that the National Party will not be supporting this bill. I invite the 60-year-old man Mr Cosgrove to come to the shopping area in South Auckland.

The ASSISTANT SPEAKER (Hon Trevor Mallard): The member will now stand, withdraw, and apologise for that.

I withdraw and apologise.

💬 Kris Faafoi: I raise a point of order, Mr Assistant Speaker.

The ASSISTANT SPEAKER (Hon Trevor Mallard): No. Before we get to that can I say to Jami-Lee Ross that I hold him responsible for Mr Bakshi having to apologise. I think that he should be aware that people can see when he is creating disorder.

I raise a point of order, Mr Speaker. I invite you to make—maybe not now, because we have other business—a considered ruling. I am not speaking about your ruling on me. I put it to you that there has been some humour across the House, no member has taken offence either way, and I would suggest to you that although you are extremely diligent and knowledgable in your rulings, I think we are in danger of going a bridge too far. I do not—

The member will resume his seat. I thank him for his advice. I will not be coming back with another ruling.

I am pleased to rise on behalf of New Zealand First and take this short call in the first reading of the Commerce (Supermarket Adjudicator and Code of Conduct) Amendment Bill. Firstly, I want to say that New Zealand First supports this bill, and I will endeavour to outline just why we are supporting it.

First, this bill’s purpose has merit. Its main purpose is to amend the Commerce Act 1986. It is going to put in place an independent adjudicator, funded by a levy coming from the suppliers and the supermarkets. So the main task this person will be tasked with is actually to develop a code of conduct, and this will primarily target preventing or mitigating the restricted trade practices and unfair dealings towards supply of groceries to supermarkets.

I just want to talk about that in depth, because I have experience with codes of conduct through the sectors that I come from. I have to highlight that codes of conduct in New Zealand in the business realm are nothing new. There is an unspoken expectation that businesses and corporations should have a code of conduct in place. Australia has a code of conduct for their supermarkets and grocery stores and so does the UK, which started off having a voluntary code of conduct that actually went to compulsory, because it allows the sector and the industry to have a middle person—and if you like the word “referee” then I will use it—before it gets to the stage of having to bring in the Commerce Commission.

Codes of conduct here in New Zealand are actually currently quite valid. They are very workable. They give the opportunity for the adjudicator to work with the supermarkets, to work with the suppliers—the very industry that will actually need buy-in and will need to believe that they can set their standards; that they can actually not only perform best practice to not only ensure that their code of conduct is fit for purpose but they can also moderate, if you like, when new smaller suppliers come in and give them that base level field for a code of conduct to come into effect.

I want to say that the former Government speaker Melissa Lee said that she did not feel that there was a need for this process to be put in place here in New Zealand. I just want to remind this Government that in July 2014 there was an allegation in this House that Countdown supermarkets were practising bullying behaviours towards their suppliers. The investigation into that was quite interesting because at that time—I was just a member of the public and could see this happening—it brought to mind a few occasions where my family have actually packed shelves in supermarkets, where they have worked within supermarkets, and there have been occasions where they have questioned the behaviour of supermarkets that were saying “You need to do this or we’ll take your preferred product away from the preferred shelves where buyers are actually attracted.”, and statistics tell us that buyers will buy product from shelves at certain heights.

So, interestingly enough, the Government officials at that time were investigating a voluntary code of conduct for the food and grocery industry here in New Zealand, but due to that investigation they were recommended to just hold off and wait to see what the outcome of that investigation was. I think the term that has been tossed around has been that the Commerce Commission did not kind of see any problem.

I want to reiterate that industries themselves, if they get the power, and we empower them to set their own code of conduct, are more than likely going to be very proud of that and buy into it and ensure that that code of conduct is adhered to. Industries here in New Zealand have had codes of conduct—like the taxi industry, the sports industry, the education industry, the medical industry, the hair and cosmetics industry, New Zealand boards of directors, corporates, and so on.

Currently we are faced with having a duopoly here in New Zealand, with two main supermarkets that hold 90 percent of the market competition. That concentration here in New Zealand is actually quite high in terms of the world global scale. The bill has been introduced by Mojo Mathers, and I want to thank her for spending the time with me to give me a bit of history about why she felt the need to bring this bill to the House. What I will say, before closing, is that I am actually quite stumped. I am stumped that a Green Party member brought this bill to the House, when in fact the Government tells us and reminds us constantly that it has a leadership role in this country. My question is: why do you not put that leadership role in place and bring such a great bill to the House? I want to reiterate that New Zealand First will support this bill. I believe that it will put in place a fair practice. It will bring us up to international standards, and it will protect the small suppliers that need businesses as well.

I was going to say I am pleased, but I do not think that is quite true—I am not greatly supportive of this Commerce (Supermarket Adjudicator and Code of Conduct) Amendment Bill. This is an example, to me, of bad legislation, for a number of reasons.

💬 Paul Foster-Bell: It’s a monster.

I would not go as far, Mr Foster-Bell, as saying it is monstrous. There are a few bills about which I might say that. I would probably ascribe that to Labour Party bills. This is not a good piece of legislation, for a variety of reasons. The first is around its intent; and, secondly, even in the delivery tonight I think we are playing into the classic lines of sort of moralising and conspiracy to justify it, and I will elaborate on that. We also have a thing about the fact that it is out of time and it is badly drafted. Although I always acknowledge, and want to acknowledge, members who bring bills to the House—I think it is good to do that—at the same time I find this is a deficient bill.

I think primarily this is about interference in the market in a way that is not needed or required. I do not say this as an absolute, total, zealous believer in the market. There is a time and place. In fact, from listening to the previous speaker, I think there were some very good examples of where we want codes of conduct or codes of practice. One that was mentioned was in the medical fraternity. Absolutely there is a time and place for codes of conduct, codes of ethics, there. But, actually, you are dealing with a different kettle of fish—if I am not beginning to mix my metaphors—of what that is trying to do there.

This bill is, effectively, a response to what I think could have been described previously as a political stunt. It is one of those political bills that came out of a political stunt. For those of us who were here in the last Parliament, and obviously following this from outside of Parliament, a member of this House came and made a series of accusations around one of the major players in the supermarket industry. I think many of us, right across the House, were quite interested in what was being said and why. But we were also looking for substance. Unfortunately, as far as my memory serves me, no substance was ever found to prove these facts.

The Government, I think quite rightly, responded to that, through the Commerce Commission undertaking an investigation to see whether or not there was any evidence—

💬 Hon Clayton Cosgrove: No, no. Shane Jones put a complaint in, not the Government.

Sorry, I have been rightly corrected. My memory, even at my age, is possibly not as good as that member’s.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

The Commerce Commission, to be accurate, chose, with facilitation from a previous member, to engage. The interesting point is that the Commerce Commission did not find any evidence of what was being put forward in the accusations. That leads me to one of the elements tonight. I talked about the debate being put forward as something that is moralising and as something that is conspiratorial. To use that latter part, we have already heard tonight: “Oh yeah. We acknowledge that this report was done, and we acknowledge that the report showed nothing, but, you know, there is a conspiracy behind it, because, actually, we know that people know that other people know what the suppliers know about what people might know in the supermarket industry.” That is just classic conspiracy. It is an attempt to deny proper process that has happened and proper results that have been given.

The second element I touched on too, which has tried to, I suppose, fuel this debate, is moralising. Everyone likes to feel that they could save some money. We have heard in elements of the debate: “Gosh, New Zealanders just want to pay less for their tomatoes, their meat, their vegetables, for everything. They are just paying too much. Who would be against forcing the change?”. Well, again, I just categorise that as moralising. In fact, the market does operate quite effectively in this space. When I think about the supermarkets, and actually the variety of supermarkets throughout my electorate—I hear some members talking about two supermarkets. Fortunately I have always been able to count beyond two supermarkets. Actually, when I think of my own electorate, there are a good number of supermarkets. In fact, Kanwaljit Singh Bakshi was talking about the number of options he finds in South Auckland, which is the same as I find in east Auckland. So there is competition in the market.

But I think the fundamental element here is that the bill is not necessary. We do not need interference in this market. The Commerce Commission has found that it is not required. I come back to my initial point. I just do not think this bill is needed or warranted, and trying to build the reasons for it on moralising and conspiracy is not particularly helpful. I will not be supporting this bill going to the select committee.

It is with great interest that I have been listening to the contributions from the National side of the House tonight. Members on that side of the House, almost ad nauseam, stand and say “We are the friend of business. We are out there, on the side of the punter.”, yet in this instance the Government is not taking the side of business and it is not taking the side of the punter. But it should, if it says what it says on a regular basis in this House, which is “Back this bill.”

This bill will give consumers and suppliers the ability to go head to head with these two big supermarket chains, to get the access that they think is fair and reasonable. I think there is a fair degree of “head in the sand” on that side of the House. I will quote a couple of members. Kanwaljit Bakshi said this issue is not that big. I went to a reasonably sized business. I am not going to name that business in this House, or say where it is, due to that business’s fear that any publicity around this issue for it will come back and bite it in the bottom in terms of the supermarket duopoly that operates here in New Zealand. The business raised with me and a number of other Labour MPs, when we went out and spoke to the business, that it has major issues with the two supermarket chains. My colleague Clayton Cosgrove has already mentioned the situation with the tomato growers, and because of the nature of the business that I visited I am not going to mention it because there are a small number of suppliers that it could potentially be. It was aghast at the behaviour of the two big supermarket chains. Again, the kinds of things that they were being told, especially around Christmas time, were: “We are asked to supply quite a lot more product, because of the time of year, at a price that we can’t sustain.” That is the kind of thing that we are being told by businesses in New Zealand when we are visiting them, so I cannot fathom that members on that side of the House, who claim to be the friend of business, can say that this is not a big issue, and that this piece of legislation is not required because nothing wrong is happening here. It is obvious to me, and to the number of businesses and suppliers to the big supermarket chains that I have visited, that something is not right here.

We have said to the Greens that we will support this piece of legislation to the select committee. We believe that there can be improvements because, unlike members on that side of the House, we believe this is an issue and it is an issue for business in New Zealand, which—again, I say—that party claims to represent in this House. I think it is slightly ironic that that party over there accuses us of not being the friend of business or small business or the Kiwi punter, and it is saying that this piece of legislation is not required. Is that not strange? Is that not odd? National would rather have the status quo, with the duopoly with the supermarket chains, carry on and would rather that the small supplier that wants to break into that market has no or little power. Some of the bigger suppliers want to make sure that they can offer their product at a price that actually means they can cover their production costs and can get into that market, but, oh no, members on that side of the House think that we do not need that—we do not need that. Simon O’Connor says “We’re not generally supportive of that.”, Kanwaljit Bakshi says “This issue is not that big.”, and they say that the market operates effectively. Well, the market might operate effectively if you are one of the big supermarket chains: it operates just fine. But if you are one of those suppliers that want to get your product into those supermarkets, then it does not operate fine at all, and that is the feedback that we have been getting.

Let us look at the other side of that equation, and that is the consumers. There is an issue around choice, there is the issue around price, and we hear from members on the other side of the House that this is moralising around what happens in supermarkets and the choices that we get to make in supermarkets. Well, let us look at people who cannot afford much in those supermarkets and look at the options that are and are not available to them and whether things can be better. Should we look at that? We believe, on this side of the House, that, yes, we should. But on that side of the House the answer is no. If they have got any guts to stand up to that duopoly, they should support this bill.

On 12 February 2014 Shane Jones railed against Progressive Enterprises here in this House. Just today it gave $30,000 to the Taranaki District Health Board children’s ward. I said that because it has been severely criticised. This is a grocery chain that over the last 10 years has given $10 million to hospitals. The reason why it does that is because it is profitable, and the reason why it is able to not only supply consumers with goods but also supply income to suppliers is because it is a profitable organisation.

I think that when it comes to this bill it is trying to duplicate in a minute way, in a granular way, the responsibilities and activities of the Commerce Commission. We know, because of what happened on 12 February last year, that a letter was received by the Commerce Commission. The commission felt that it was a serious enough allegation to go into an investigation, which, when it came to report to the Commerce Committee—which I was chairing at that particular point in time—members like Clayton Cosgrove certainly put the fire to its feet to try to find out exactly what it was investigating or what sorts of outcomes it had come to. The Commerce Commission has printed a report that is available to the public, and it has said that the practices that it found were not unlawful.

When it comes to, for example, coercion, coercion is actually what happens in business. I go and buy something and it is called pressure, it is called negotiation. Those gentlemen across on the other side there may bring out their issues and quote their things but when it came to the Commerce Commission’s report, what it said when it looked at this particular issue was: “Progressive assertively communicated its expectations for improved performance and margin to two suppliers. Progressive advised that it may have to consider how it sourced, ranged, displayed and promoted the suppliers’ products if the suppliers failed to meet Progressive’s expectations. The two suppliers concerned were large multinational companies.”

This is the business of buying and selling and supplying and creating an opportunity—an outlet—for those products, and it happens. It happens. In fact, there were comments made around what the Commerce Commission looked at that I want to just read out to you because I find it very, very interesting indeed. It said: “The courts have recognised that in everyday, non-legal terms, anyone might feel ‘coerced’ if, while under pressure, they agree to [do] something they would prefer not to do. However, the courts have said that something more than persuasion is required to breach section 23, and not every form of pressure amounts to ‘coercion’ in law.”

So all of these issues are about where the fine line is. We essentially disagree with this bill because we believe that the courts of this country and the Commerce Commission have everything they need in terms of legal ability to work through these issues if there are genuine and serious complaints. It is very interesting to know that food prices decreased half a percent in the year to October 2015. It is interesting also to know, for example, that Countdown added 7,000 new products to its stores in 2013, which is equal to 23 percent of total products.

There is huge competition to get your product on their shelves, because many, many hundreds of thousands of New Zealanders go there to buy and they need to have that expectation that a product that is promised to be a great seller is going to achieve their goals. It is their business to be, in a sense, the infrastructure for the ability for consumers to come and purchase, and they have people who compete to get products on their shelves. All of this is how this grocery business works.

What the member in charge of the bill is wanting to do is to create an adjudicator, but I do not think it is going to work in the way she wants it to work. But we do have the Commerce Commission and we have the courts of this nation, which I think work very effectively in this particular area. We do not support this bill.

Thank you, Mr Assistant Speaker, for the opportunity to speak on this bill. I would like to address comments from the other side of the House.

The UK has 12 or so supermarket chains, so there is far more competition than what we have here in New Zealand. Here we have only two major supermarket chains, and yet the Government does not want to introduce an adjudicator. This bill would amend the Commerce Act 1986. It would require supermarkets to establish an adjudicator, and we on this side of the House believe that this is a good thing. An adjudicator, according to this bill, must in turn establish a code of conduct and then he or she would be able to resolve issues that may arise between supermarkets and their suppliers when and if the code of conduct is breached. This bill would prevent and mitigate restrictive trade practices for the long-term benefit of consumers and suppliers.

I welcome this legislation. We believe on this side of the House that it would address the power imbalance between our limited number of supermarket owners and their suppliers. Labour has been concerned about the issue that this bill would address for quite some time. We have been working for a number of years on a bill that would look at options for developing a code of conduct for the supermarket industry. So we are pleased the bill that Mojo Mathers has introduced will actually look at developing a code of conduct, and one of the key tasks of this bill would be to introduce an adjudicator.

The Labour Party has also been pushing for section 36 of the Commerce Act to be reviewed, because we would like to ensure that companies with substantial market power cannot continue to dominate the market unfairly. We believe that the bill we have been working on is tailor-made, and even though we in the Labour Party support this member’s bill going to the select committee we will be introducing amendments if it gets to that stage. Establishing a code of conduct and an adjudicator to oversee compliance with the code should have beneficial flow-on effects to both local producers and local consumers. New Zealand is a small country. We have a comparatively small population, and the fact is that some of our consumer markets lack competition. Certain industries, such as supermarkets, have been dominated for too long. In fact, having only two dominant chains that have a 90 percent share of the market shows that we should have an adjudicator to actually address that issue of control of the market; it leads to higher prices, particularly for families and end-consumers.

The most recent Colmar Brunton poll reveals that the top issues concerning our Kiwi families are wages and the cost of living, affordable housing—or the lack thereof—and unemployment. Thousands and thousands of families across this country are struggling just to survive. They are struggling just to make ends meet. Allowing local producers, as this bill would do, to survive in the supermarket arena should bring local benefits to our local communities, and a code of conduct could possibly put a brake on any attempts to price gouge or to price fix what is charged to our consumers.

A lot of our people are in South Auckland and when they have jobs, that does not actually give them fixed hours, does not actually guarantee them a fixed income per week, and does not even guarantee that they can earn enough money to pay large sums of money to childcare providers to assist them so that they can go out to work. We believe that we need a bill like this. However, as I said earlier on, if the bill gets to select committee, the Labour Party will be introducing several Supplementary Order Papers. Thank you so much.

Thank you very much for the opportunity to rise in opposition to the Commerce (Supermarket Adjudicator and Code of Conduct) Amendment Bill 2015. I think that I am living in a little bit of a warped sense of reality, having listened to some of the arguments opposite, because I would simply say: Commerce Commission. The Commerce Commission is our regulatory body that takes care of competition and looks at fair trading, and in my mind it is certainly working well and the parent Acts that govern it, the Commerce Act and the Fair Trading Act, are working well. So I do not believe that this bill is a strategic change for the better. In fact, I think this is just really messing around the edges and a little bit of jiggery-pokery.

As has been discussed before, the aim of this bill is to require a change to the Commerce Act and put in place a supermarket adjudicator to resolve disputes between supermarkets and suppliers. Again, my question is why, when have the Commerce Commission, which is our primary competition regulatory agency? We have already got good legislation in place, which is working well. The commission was established in 1986, and it is an independent body. So its functions, its enforcement, and all of its regulatory activities are independently undertaken.

💬 Todd Barclay: And Goldie’s doing a good job.

Yes, the Minister of Commerce and Consumer Affairs is doing a very good job in overseeing commerce and all that it entails.

The Commerce Commission’s purpose is to achieve the best possible outcomes in competitive and regulated markets for the long-term benefit of New Zealanders, and I believe it certainly is doing this. We do not need further red tape to complicate the issue. That is something that I learnt when my colleague the honourable member Jacqui Dean ran a series of workshops called “Rules Reduction”. We held one of those meetings in Invercargill, it was well attended, and one of the things that I learnt is that people, in general, especially in Southland and in New Zealand, instinctively know what is fair. And, actually, people do not automatically revert to the worst-case scenario in their dealings. We do not need to govern for that minority. People in business do not like complicated or overly bureaucratic rules. We do not need an extra layer on top of legislation that is already working well. We do not need another adjudicator on top of an independent body that is doings its job well and is completing its mandated tasks well.

If you over-complicate these rules, even good operators will not be able to comply with all of the red tape that is put in place. They will not have the time and they will not have the resources, and the only winners will be lawyers, at the end of the day, as they navigate through a complex set of rules trying to trip up honest, hard-working businesses as they go about their fair trading.

As my colleagues pointed out, last year the Commerce Commission investigated and found no evidence that a major supermarket company had breached the Commerce Act or the Fair Trading Act. In coming to this decision, the Commerce Commission report did not indicate at any stage that it lacked the tools, the expertise, or the resources needed to complete that investigation. As the Government we have no plans to compel supermarkets to enter into any industry code unless they want to do so voluntarily. We believe that people instinctively know what is fair. We believe that the existing legislation is working well and that the Commerce Commission is doing its job appropriately. There is, therefore, no need for this bill, and I therefore oppose it.

Well, it is very clear to me from listening to the speeches that this side of the House is on the side of small businesses and consumers and that side of the House is absolutely complacent—everything is all sweet and hunky-dory in New Zealand; the large supermarket chains never abuse small businesses, never take advantage of them, never exploit them, and are always reasonable; it is all sweet and there is no power imbalance; and the Commerce Commission is able to deal with any issue that arises. Well, that is a load of bunkum. It is just not the case.

You have heard from this side of the House that we have been getting stories from businesses and suppliers that have been approaching us and have been telling us about practices that are clearly unfair, clearly not working, and are clearly disadvantaging local food suppliers and producers in favour of large multinational corporations, which are flooding the supermarkets with their mass-produced products from overseas. So we want to support local suppliers that are here in New Zealand, and we want to have a fairer deal for them.

A lot of people have made a big song and dance about the Commerce Commission saying that it found that no laws had been broken. That is the whole point of this bill. The whole point of this bill is to create a fairer system, because despite what it found it did not therefore follow that there was no unfairness in the system, but that the current legal system is not equipped to deal with it. This bill is to bring in a low level of regulation in order to create fairness, and that is what we stand for. I think it is time for a vote and to find out what parties actually stand for: for fairness, or for large companies and anti-competitive practices?

In accordance with the leave granted earlier today, the House stands adjourned until 2 p.m. tomorrow.

The House adjourned at 9.59 p.m.