Key supports extortion claims inquiry

Prime Minister John Key says he would support a Commerce Commission inquiry into the treatment of suppliers by supermarkets chains, given the importance of the industry to New Zealanders.

Labour MP Shane Jones said in Parliament on Wednesday that Progressive Enterprises had asked suppliers for compensation for losses the company suffered in 2013, and that if they didn't pay they would lose the right to shelf space.

Mr Jones claimed Countdown, the supermarkets owned by Progressive, had also told suppliers if they didn't pay, they would lose the right to supply.

Using parliamentary privilege, he told the House that Countdown was blackmailing New Zealand businesses because of lower than expected profit margins.

"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.' In any other sort of country that's blackmail, that's extortion," he said.

Mr Jones has referred the matter to the Commerce Commission and John Key said on Thursday that is the best agency to consider the claims.

"New Zealanders rely on supermarkets, they're a very important part of daily life in New Zealand. They're important both from a consumer point of view and actually they're very important for companies that supply those supermarkets, and they should be treated fairly. So I think it's a good idea for the Commerce Commission to look at that."

Mr Key said, however, the onus is now on Shane Jones to come up with proof to back the claims he has made, which remain unsubstantiated. He said he is always suspicious of MPs who make claims under parliamentary privilege, then refuse to repeat them outside of the House.

Commerce Minister Craig Foss said on Thursday the allegations are very serious and has asked the commission to investigate, and if it finds there is illegal activity it can take action. The minister said his office has not received any complaints relating to suppliers being bullied or intimidated by supermarkets.

The Commerce Commission said it has received a letter of complaint from Shane Jones and was treating the letter as it does all complaints and would decide whether to investigate further in due course.

Progressive rejects accusations

Progressive Enterprises says it has questioned supermarket managers responsible for negotiating contracts with suppliers and has found no evidence of suppliers being bullied or intimidated.

Managing director Dave Chambers said on Thursday he categorically rejects any accusations that Countdown supermarkets have demanded retrospective cash payments, or engaged in behaviour that could be seen as blackmail or extortion.

Mr Chambers told Nine to Noon on Thursday that he is pretty stunned by the claims and has directly sought assurances from the merchandising managers who negotiate the contracts with suppliers and the company does not, nor ever will, make demands for payments from suppliers.

"We do not, we will not and we are not making demands for retrospective payments from our suppliers. It isn't how we operate, it's not how we're gonna operate, and we are not doing it. And I haven't had one phone call - and I get phone calls regularly from suppliers with both good and b bad things - and no one has come forward with that."

Mr Chambers said negotiations with suppliers over price are robust, but also fair and transparent.

Assurance given

Food and Grocery Council chairman Pierre van Heerden said he has had direct discussions with Dave Chambers about concerns raised by some companies.

Mr van Heerden told Radio New Zealand's Nine to Noon programme on Thursday he was given an assurance that no retrospective payments have been, or will be, required from Countdown supermarkets.

The council says an inquiry by the Commerce Commission into supermarkets' treatment of suppliers could improve the relationship between the two. It says when Australia's commerce watchdog held an inquiry, it significantly improved negotiations between supermarket chains and their suppliers over pricing.

Business commentator Rod Oram told Nine to Noon while it is not clear that supermarket companies are actually threatening New Zealand suppliers over company losses, they are fiercely competitive and tough with producers. Mr Oram said the tactics they use to get cheap prices out of suppliers are certainly "hard ball".

Australian inquiry, Dick Smith echoes complaint

The Australian Retailers Association says an investigation by the competition watchdog is underway into claims supermarkets are bullying suppliers in Australia.

Executive director Russell Zimmerman says the Australian Competition and Consumer Commission is dealing with similar allegations of undue pressure being applied to suppliers by two Australian supermarket chains. He says the chains flatly deny the claims.

However, Australian entrepreneur and food company owner Dick Smith described supermarket owners across the Tasman as being "completely ruthless" with their suppliers.

Dick Smith told Radio New Zealand's Morning Report programme on Thursday that consumers wanted the cheapest price, which put pressure on competing supermarket companies to maintain profits, so he was not surprised by Shane Jones' allegations.

Horticulturalists say they have not heard of any supermarkets using the kind of extortion tactics outlined by Shane Jones in Parliament.

Horticulture New Zealand chief executive Peter Silcock said he had never heard of this happening.

"We certainly haven't heard any comments about these kind of extortion tactics. That doesn't mean they are not happening, but we certainly haven't had reports about those recently or at any time really."

Mr Silcock said if there were any such problems, he would expect them to be dealt with very quickly.