13 Feb 2014

Supermarket chain accused of extortion

5:44 am on 13 February 2014

Australian-owned supermarket chain Progressive Enterprises is rejecting allegations made in Parliament that it is trying to extort money from New Zealand suppliers.

Shane Jones.

Shane Jones. Photo: RNZ

Using Parliamentary privilege, Labour Party MP Shane Jones said on Wednesday the company has told firms supplying products and produce to its supermarkets that they need to pay compensation for losses it suffered in 2013.

Mr Jones told the House that Progressive Enterprises has threatened that there will be no shelf space in the future if the suppliers don't pay.

"The Aussie driven owners and managers of the supermarket chain are saying to our Kiwi managers, our Kiwi firms: 'You will hand over a cheque for my historic losses, or you will never gain shelf space on the supermarket. And if you breathe one word of this, we will blacklist you permanently.'"

Mr Jones said this would be called blackmail in any other country.

Progressive Enterprises on Wednesday said it categorically rejects the allegations. It said it has a long history of supporting New Zealand suppliers and has strong relationships with more than 1200 local and multinational companies in New Zealand.

Managing director Dave Chambers said if any MP or supplier has questions or concerns, they are welcome to make contact directly.

Katherine Rich from the Food and Grocery Council said she is aware of a number of incidents where member companies have been asked for retrospective payments and raised this with the supermarket chain involved.

Ms Rich said this is a serious matter and an unwelcome development in the New Zealand grocery sector.

Shane Jones said he is contacting the Commerce Commission.

Call for inquiry

The head of New Zealand's consumer watchdog organisation says an inquiry may be needed into supermarket practices following the allegations in Parliament.

Consumer New Zealand chief executive Sue Chetwin said the Commerce Commission could decide to investigate possible anti-competitive behaviour by supermarket chains.

Ms Chetwin told Radio New Zealand's Checkpoint programme on Wednesday she is not surprised that suppliers are swearing Shane Jones to secrecy over their names.

She said that would not be unusual, as these businesses depend on supplying supermarkets "so they are generally very scared to put their head above the parapet."

Food safety campaigner Sue Kedgely told Checkpoint there should be an investigation into the matter and a code of practice supermarkets would be forced to follow.

"I've heard many tales like that of standover tactics being used by supermarkets to their suppliers. And the reality is that we have a duopoly in New Zealand, we have the highest concentration of power in two supermarket chains of anywhere in the world. Most other countries have five or six supermarket chains - we just have two."

Ms Kedgely said New Zealand needs something like the supermarket ombudsman system in England.

"The Ombdusman will listen to anonymous complaints because suppliers are not prepared to come forward and lose their business. They've introduced a whole system of anonymity to investigate complaints and that's what's needed here.

"We need an inquiry, we need a supermarket code and we need just some basic rules."