Fair Trading Act penalties not stiff enough to deter supermarkets from engaging in misleading pricing, Consumer NZ says

The Commerce Commission is investigating the supermarket giants. Photo / NZME

The Commerce Commission has opened an investigation into the supermarket majors following an allegation of Fair Trading Act breaches.

Consumer NZ chief executive Jon Duffy said he would have preferred for the commission to have started its investigations earlier, but said he was happy it was getting to it now.

The competition watchdog said it was investigating Woolworths, Foodstuffs North Island and Foodstuffs South Island after Consumer NZ lodged a complaint with the commission in August.

“New Zealanders are already struggling with the price of groceries; overlay misleading and deceptive pricing and discounting activity on that and you get consumers that are doing it really tough,” Duffy said.

He told Newstalk ZB the range of concerns includes differences in price on shelves to what people pay at the checkout, to multi-buys where it costs more than buying a single item.

“We’re worried that New Zealanders are constantly being overcharged because the systems in place aren’t robust enough,” Duffy said.

He said there was also a concern about how supermarkets go about promoting discounts.

“Deals of loyalty schemes for example, and then there are also kind of nebulous representations like ‘everyday low price’. Is that item actually on special or is the supermarket signalling to you that it’s a good price but not a discounted price?” he said.

“These are very, very confusing for consumers.”

Duffy said the Fair Trading Act did not carry stiff-enough penalties.

“The last supermarket that was prosecuted for this type of thing was a Pak‘nSave in Māngere, it was a few years ago and it received a $78,000 fine and that was for being caught red-handed having till pricing that was different to the shelf pricing,” he said.

“$78,000 is just a few hours’ turnover for a business that large, we don’t feel the fines in the Fair Trading Act or at least the way the courts have been imposing them are big enough to deter businesses of this scale.”

Consumer NZ claimed supermarkets were engaging in misleading pricing, charging more than advertised and had misleading specials and promotional practices.

Commerce Commission deputy chairwoman Anne Callinan said the investigations into the supermarkets would consider whether certain pricing and promotional practices of the three companies complied with the Fair Trading Act.

Commerce Minister Andrew Bayly told BusinessDesk he wants the commission to be brave and take on well-resourced large players such as the supermarket duopoly and fully use the tools in its regulatory arsenal, including prosecutions.

A spokeswoman for Woolworths, which was previously known as Countdown, said in a statement: “The Commerce Commission has contacted us regarding the pricing complaints it has received since September 2022. We will co-operate fully but it is not appropriate for us to comment further.”

A Foodstuffs spokesperson said the grocer, which operates the New World and Pak’nSave brands, was aware of the Commerce Commission investigation and would cooperate fully. “We take pricing and promotion accuracy and integrity very seriously every day,” they said.

Read the full BusinessDesk story here.