MP accuses Countdown of extortion

HAMISH RUTHERFORD AND MICHAEL FOREMAN
Last updated 17:19 12/02/2014

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Labour MP Shane Jones has accused Progressive Enterprises - owners of the Countdown supermarket chain - of "extortion", demanding cash payments from Kiwi suppliers for past losses.

Using Parliament privilege today, Jones said he had been in contact with Kiwi suppliers about meetings they were being summoned to with Countdown management, in which they were told that if they did not make cash payments, they faced permanent exclusion from the shelves. Likewise, if they revealed the meetings to anyone, they would be "blacklisted".

Jones said: "In this speech I'm fulfilling my duties as a Parliamentarian to alert us to a level of extortion that is going unchallenged in our food and grocery sector," Jones said in Parliament, describing events as "the Countdown shake down".

Jones said Kiwi suppliers seeking to do business with Countdown were being called into meetings with management, where they were taken into meeting rooms.

"They're being told by the Australian-owned supermarket 'our profit margins did not meet the shareholders' expectations last year. We want more profit out of you'."

Jones said: "They are demanding of Kiwi businesses payments, backdated cheques, and recompense, sir, for the losses the supermarkets assert they suffered last year.

"Sir, and if they don't pay these cheques, they are being told, 'no shelf space into the future'. In any other country, sir, that's blackmail. That is extortion," Jones said.

"A number of firms have been told their products will not be placed on the shelves of our supermarkets unless they make backdated payments and make remuneration for loses sustained by the supermarkets," Jones said.

Australian managers were telling Kiwi suppliers: "You will hand over a cheque, for my historic losses... or you will never gain shelf space on the supermarket. And if you breath one word of this, we will blacklist you."

Countdown managing director Dave Chambers said the company rejected  "categorically" Jones' claims.

"We're very proud to have a long history of supporting New Zealand suppliers and we have strong relationships with more than 1200 local and multinational companies here," Chambers said in a statement.

"If any MP or supplier has questions or concerns about our business they are welcome to contact us directly to discuss them. We will fully cooperate with any enquiries from the Commerce Commission."

Jones said he would deliver an official letter of complaint to the Commerce Commission about the behaviour later today.

"This monopolistic abuse, these threats, this intimidation is driving our fellow Kiwis to their wit's end," Jones said.

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"I only hope my fellow citizens, consumers from all around the country say 'we will not acquiesce with the importation of this corrupt culture from the Australian shareholders into our business environ.

Major sectors of the economy were being affected, Jones said, "causing God fearing Kiwi businesses to live in abject fear."

Jones called on Countdown to end the tactics.

"Stop threatening, stop your Mafioso tactics against Kiwi businesses, treat them with a decent shot. Give them a fair go and stop threatening them that they'll be bankrupted or blacklisted if they squeak, as to this extortionary behaviour. Sir, this verges on corruption," Jones said.

"I'll go to Pak n' Save because the Aussies should pack up and go home."

Pak 'n Save, New World, Write Price and Four Square stores are part of the New Zealand-owned Foodstuffs co-operative.

Food and Grocery Council chief executive Katherine Rich issued a short statement this afternoon following Jones' comments.

"We're aware of a number of incidents where our member companies have been asked for retrospective payments. We have raised our general concerns about this practice with the supermarket chain involved," Rich said.

"This is a serious issue that is new to the New Zealand grocery sector and we view it as an unwelcome development.

"We have asked members to report further occurrences."

CALL FOR BOYCOTT

A social media campaign calling for a boycott of Australian-owned supermarkets in retaliation for Kiwi products being stripped from supermarket shelves across the Tasman is gathering momentum.

A Boycott Countdown Facebook page set up last week had attracted more than 1000 "likes" by this morning and a chain letter-style email calling for a boycott of Countdown and hardware chain Bunnings has been circulating this week.

"Show the Aussies that we are not to be messed with. Pass this on to all your contacts now!" the email said.

Meanwhile, on Countdown's official Facebook page, users have been hijacking the supermarket's promotional posts with replies that refer to Woolworths' "buy Australian" issue.

"Countdown do not realise just what sort of backlash their 'don't buy New Zealand' modus operandi is going to have on their brand and business," posted Murray King in response to a Countdown post advertising its online grocery shopping service.

Countdown managing director Dave Chambers used the company's website to deny New Zealand goods were banned in Woolworths supermarkets in Australia.

"The decisions made by Woolworths supermarkets to support local farmers apply to a small number of own-brand product lines and are not specific to New Zealand," he said in a statement posted yesterday.

"There is not a ban on New Zealand products on Woolworths supermarkets shelves: there are many New Zealand producers who work successfully in the Australian retail market and have done so for many years," Chambers said.

"There are also examples on both sides of the Tasman where local customer preferences come into play - we choose not to stock Australian apples, for example."

The statement appeared to suggest that any boycott of Countdown would be counterproductive as it said 94 per cent of Countdown's sales were made from New Zealand suppliers' products.

Of Countdown's own-brand sales, 70 per cent came from locally sourced products while 7 per cent came from Australia, Chambers said.

- Fairfax Media

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