The Commerce Commission says it will take Foodstuffs South Island to court over alleged "far-reaching anti-competitive conduct that deprived customers of cheaper prices".
Foodstuffs South Island Ltd (FSSI) is a co-operative and the owner of New World, Pak'nSave and Four Square in the south.
The competition watchdog alleged it implemented and enforced a widespread restriction on independently owned Pak'nSave stores discounting selected products.
"The conduct we allege occurred deprives Kiwis of the best possible prices when shopping at their local supermarket and limits competition," Commerce Commission chairperson John Small said.
"Under the franchise model, individual South Island Pak'nSave supermarkets are supposed to be able to compete on pricing, discounts and promotions.
"Instead, we allege FSSI applied guidelines and rules that stopped these independently owned and operated supermarkets from offering certain discounts unless they received prior approval."
He said the Commission would argue that the conduct constitutes resale price maintenance, which is illegal and prohibited by section 37 of the Commerce Act. Resale price maintenance prevents retailers from setting their prices below certain levels, which limits competition and can lead to higher prices.
Specifically, the Commission would allege FSSI guidelines and rules prevented three forms of discounting.
FSSI centrally set a 'Super Deal' promotion price for a product and prohibited franchisees from discounting below this price, unless the Pak'nSave obtained prior approval.
Franchisees were also prohibited from discounting any other product in the same category below the 'Super Deal' promotional price.
FSSI also set an 'Every Day Low Price' centrally, primarily for 'shelf staple' goods, and prohibited Pak'nSaves from applying further discounts on these products unless prior approval was given.
"We will argue the alleged anti-competitive conduct was widespread, with FSSI's guidelines covering all South Island Pak'nSave franchisees for a period of at least several years," Small said.
'We take our responsibilities seriously' - FSSI
In a statement to 1News, a FSSI spokesperson acknowledged the Commerce Commission's proceedings, and reiterated the allegations related specifically to alleged conduct by Foodstuffs South Island.
"They do not relate to locally owned and operated Pak’nSave stores or Foodstuffs North Island," they said.
"We take our responsibilities seriously and have engaged constructively with the Commerce Commission throughout its investigation and will continue to do so as the matter progresses.
SHARE ME