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There is very little public trust left in Foodstuffs North Island after being fined for using land covenants to block its rivals, a grocery advocacy chair says.
The company was fined $3.25 million in the Wellington High Court for deliberately using covenants on land to hinder rivals after the practice came to light in a Commerce Commission market study in 2022.
Foodstuffs use land covenants to block rival supermarkets
Grocery Action Group chair Suzanne Chetwin told Morning Report t the practice effectively prevented competitors from being able to set up in small towns and cities around the North Island.
"This is where Foodstuffs would buy up land that could potentially be used by a competitor and they would put covenants on this land that would prevent them being able to be used as supermarkets.
"Some of those covenants were of 99-year duration."
Chetwin said the fine was high in terms of the law, but was only a drop in the ocean for Foodstuffs.
"This is a $25 billion industry.
"In terms of them saying they no longer do it. Well of course they no longer do it, because it's illegal for them to do it now," she said.
"They haven't willingly come to this party."
Chetwin stated that one of the most concerning problems in the grocery industry in New Zealand was a lack of competition.
"Both the Commerce Commission and the OECD have found we have a very anti-competitive market, that we are paying some of the highest prices in the world for groceries.
"I think the proposed merger has got to be stopped because I don't believe that Foodstuffs has shown that it can be trusted with customers."
In a statement, on Thursday a spokesperson for the organisation said it accepted the penalty imposed by the court.
There was no intent to act unlawfully, they said.
"In 2021, we started lifting any remaining covenants and immediately stopped enforcing them, and by January 2024 we had removed any registered against land we own.
"Foodstuffs North Island no longer includes restrictive covenants in new property transactions and supports the Commerce (Grocery Sector Covenants) Amendment Act 2022, which deems covenants unenforceable."