Supermarkets could face huge fines for breaching new code

Countdown and Foodstuffs could face fines of up to $10 million or three times any commercial gain they got if they breached a new supermarket code – whichever was higher – a Cabinet paper shows. If the commercial gain supermarkets made from rule-breaches could not be calculated, fines could be potentially higher still, running to up to 10% of their revenues during the accounting period of any breach, ministers decided. Commerce Minister David Clark announced earlier this month that he would appoint a Grocery Commissioner to oversee a new code of conduct for the industry that is designed to prevent the two supermarket groups from wrongly exploiting market power they had over their suppliers. Clark forecast the code, which is still out for public consultation, could mean more shoppers had a wider range of food products to choose from, without higher prices. A newly-released Cabinet paper made clear that although the new Grocery Commissioner, based at the Commerce Commission, could ‘‘issue warnings, accepting undertakings and issue stop or direction orders’’ they would need to apply to the courts to seek fines or compensation orders. Clark had previously revealed that the Commerce Commission would receive $4.8 million to fund the new role in overseeing the code in its first year. It has been suggested that work could be funded in future years through an industry levy. The new Grocery Commissioner would be able to act on their own authority ‘‘or with two other members of the commission to sit with the Grocery Commissioner for specified matters’’, a Cabinet minute said.