Woolworths, Pak'nSaves face criminal charges over pricing, misleading specials

The Commerce Commission is filing criminal charges against Woolworths and two Pak'nSave supermarkets for inaccurate pricing and misleading specials.

The charges will be made separately against Woolworths, Pak'nSave Silverdale and Pak'nSave Mill Street.

The commission said there are ongoing issues with pricing in the supermarket sector and the operators may have breached the Fair Trading Act.

In a statement, deputy chair Anne Callinan said operators should know what the expectations are.

"Supermarkets have long been on notice about the importance of accurate and clear pricing and specials, and we're not satisfied with the continuing issues we're seeing across the industry.

"Pricing accuracy is a consumer right and an expectation of a competitive market. The major supermarkets are large, well-resourced businesses that should invest the time and effort to get pricing and promotions right."

She said the charges were filed to remind all supermarkets that they are expected to fix the pricing accuracy issues and implement better processes.

The Commission said it has ongoing investigations into other supermarket operators.

Grocery Commissioner Pierre van Heerden said the introduction of a mandatory disclosure standard would make it easier to identify problems so they can be remedied.

"The standard will require the major supermarkets to regularly disclose information about customer complaints, including around pricing and promotional issues.

"The major supermarkets don't have consistent processes for recording customer complaints - the lack of clarity and reporting means supermarkets can't identify potential compliance issues within their businesses. This impacts consumers as their complaints may not be being dealt with effectively, which we would expect in a competitive market."

The commission is working on the standard with the major supermarkets and expects to have a draft published in the new year.

Foodstuffs, Woolworths respond

A statement from Foodstuffs North Island, which runs the Pak'nSave supermarkets, said it had cooperated fully with the Commission's investigations.

A spokesperson said errors were relatively rare but the operator agreed inaccurate pricing was unaceptable.

"We're working hard to ensure that the price customers see on shelf is always what they pay at checkout, and that all specials offer clear savings."

If a customer believes they have been charged the wrong price they should talk to the team in store or contact customer service, the statement said.

Woolworths said it was important customers could trust prices advertised at their supermarkets, but sometimes errors occurred.

In a statement, managing director Spencer Sonn said when customers paid more for a product than advertised they could get a refund.

Electronic shelf labels had also been introduced in 130 of its 186 New Zealand stores to prevent errors.

Woolworths said it has cooperated with the Commerce Commission's pricing investigation for some time and would review the proceedings when filed.

Consumer groups react

Consumer New Zealand chief executive Jon Duffy said even if pricing errors were relatively rare, supermarkets were well resourced and profitable enough to get prices right.

"Even if they are rare in the grand scheme of the numbers of units of items you are putting through your supermarket, getting the price right is an absolute basic fundamental of running a grocery store."

Duffy said the maximum $600,000 penalty for a breach of the Fair Trading Act was inadequate for supermarkets turning over millions of dollars a day.

Grocery Action Group chair Sue Chetwin said supermarkets were not careful about their pricing because they did not have to be.

"If we had more competition in New Zealand, that would stop supermarkets from being able to basically do what they like because they act as a duopoly, there's not really any competition. They'll get taken to court like this and in 12 months' time there will be further evidence to show they've been at it again.

"If we had more competition they would have to be far more careful because consumers could shop around and they could see for themselves what prices really should be."

The Commerce Commission, Foodstuffs and Woolworths declined interviews with RNZ because the matters are before the courts.

A mistake could be a defence

Lawyer Glen Holm-Hansen, a partner at Hesketh Henry, said the commission would need to look at whether there were enough checks for inaccurate pricing.

He said it was an offence to mislead a consumer under the Fair Trading Act, but a reasonable mistake could be a defence.

"What the commission will be looking at, is whether or not there were robust process in place to ensure compliance, so that these issues didn't arise - or when they became known to the supermarket they took remedial action within a period of time."

He said the commission was waving a warning flag.

"Part of what the Commerce Commission is wanting to do, is they've had the grocery commissioner set up, they've advised on what their priorities are, and know they've got to be seen walking the talk, if you like."

Meanwhile, people in Wellington did not hold back on how they felt about the supermarkets.

"They're spreading lies about pricing," one woman said.

"I need food, I don't want to pay like a million dollars for cheese that's literally being produced locally," one man said.

"Ten dollars for a packet of raspberries - come on mate, you're taking the mickey, that's not reasonable," another said.

Some said they kept a close eye to make sure they were not being ripped off.

"I always flip the pricetag and check if I'm getting a good deal or not.

"I've heard prices don't reflect what you ring up - so what's on the tickets on the shelves doesn't match up. So much so, and so much of it, that I know avoid going to Woolworths deliberately."

Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.