Supermarket allegations: Consumers are ultimate losers

Consumers would be the ultimate losers if supermarkets were extracting retrospective payments from their suppliers, Commerce Minister Craig Foss said this afternoon.

Labour's economic development spokesman Shane Jones this afternoon confirmed he'd written a formal letter of complaint to competition watchdog the Commerce Commission over his allegations yesterday in Parliament that Australian owned chain Countdown was "blackmailing" its suppliers.

Mr Jones says suppliers claim they'd been told by Countdown to make retrospective payments to cover historic losses on their products or face having the products removed from supermarket shelves.

Mr Foss today said he was taking Mr Jones' allegations very seriously.

"It is for that reason that I've written to the Commerce Commission this morning to bring it to their attention so that I'm kept informed of their activity in this space."

"I'm concerned about allegations that harm New Zealand consumers ... it may end up resulting in less competitive markets supplying the supermarkets.

Mr Foss said Mr Jones' allegations were the first he'd heard of suppliers being tapped for retrospective payments by supermarkets.

He had previously heard of "heavy handed tactics" being used on suppliers by supermarkets but "nothing of the significance of the allegations yesterday".

The Commerce Commission will now consider whether to launch a formal investigation but Prime Minister John Key said he'd welcome an inquiry.

"I think it's a good idea for the Commerce Commission to look at that.

"But I would say this: They're unsubstantiated claims really the onus of proof to a certain degree is on Shane Jones and I'm just always a bit sceptical of people making claims under parliamentary privilege and then refusing to make those claims in the public domain."

Food and Grocery Council chairman Pierre van Heerden said he had discussed the issue with the managing director of Countdown owner Progressive Enterprises, Dave Chambers, last week.

"He has given me the assurance that, under his watch, there will be no retrospective payments from any suppliers.

"The council welcomed that message, and the main thing was to resolve the issue.

"And with Dave saying that there will not be any retrospective payments, that is a good thing for the membership who may feel that they've been put under pressure."

Mr van Heerden said negotiations between suppliers and chains were "robust"and the demand for retrospective payments was a recent development.

His colleague, Ms Rich, yesterday confirmed the organisation was aware of "a number of incidents where our member companies have been asked for retrospective payments".

"We have raised our general concerns about this practice with the supermarket chain involved," she said.

"This is a serious issue that is new to the New Zealand grocery sector and we view it as an unwelcome development. We have asked members to report further occurrences."

Mr Jones told Parliament's House yesterday a number of New Zealand suppliers had told him that they had been called to meetings with the supermarket chain's managers.

The supermarkets demanded "backdated cheques and recompense for the losses the supermarkets assert they suffered last year," he said.

"And if they don't pay these cheques, they are being told no shelf space into the future. In any other sort of country that's blackmail, that's extortion."

Mr Chambers said he "categorically" denied Mr Jones' claims.

His company would "fully co-operate with inquiries from the Commerce Commission".

Business commentator Rod Oram told Radio New Zealand that suppliers were massively disadvantaged if they had to absorb the cost of unsold stock.

The sector was very competitive and the tactics in negotiations between suppliers and supermarkets were hard-ball, he said.

"It's a very, very unequal relationship. I think it's one of the most uncomfortable commercial relationships that I know."

John Key comments on the Australian supermarkets decision to take Kiwi goods off their shelves