Mathers Mojo: Commerce (Supermarket Adjudicator and Code of Conduct) Amendment Bill — First ReadingText is incorporated into the Bound VolumeMathers Mojo: Commerce (Supermarket Adjudicator and Code of Conduct) Amendment Bill — First Reading[Sitting date: 02 December 2015. Volume:710;Page:8530. Text is incorporated into the Bound Volume.]MOJO MATHERS (Green): 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.