Countdown allegations 'very serious' - Minister

HAMISH RUTHERFORD
Last updated 14:55 13/02/2014
Fairfax NZ

John Key on Countdown

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Commerce Minister Craig Foss has drawn the ''very serious'' allegations made about Countdown to the attention of the Commerce Commission.

Yesterday in Parliament Labour MP Shane Jones accused Countdown of ''extortion'' alleging the company was demanding cash payments from Kiwi suppliers for past losses, with the threat of being blacklisted if they refused or spoke of the demands.

Countdown has ''categorically'' rejected the allegations.

Last night Foss refused to comment, referring all questions to the commission, but today he said he had written to the regulator about the issues raised and asked to be kept informed of the competition regulator's activities.

''They're very serious allegations, new allegations in the New Zealand market, which is a major concern, which is why I brought it to the attention of the Commerce Commission,'' Foss said today.

While Foss said there was about one complaint a week made to the commission about the tactics of supermarkets, allegations made by Jones ''takes everything to another level''.

He had not received reports of the specific allegations Jones made yesterday, but believed the publicity he brought to the issue may flush out complaints.

''If there are issues of anti-competitive behaviour, refer them, complain to the Commerce Commission and they will follow due process.''

PM NOT WORRIED

Earlier today, Prime Minister John Key said he was a bit sceptical of Jones' claims that supermarkets were mistreating supppliers.

Key questioned the way the claims had been made under parliamentary privilege.

"If they're absolutely factually correct there is no issue about saying them in the public domain," Key told reporters.

"You don't need parliamentary privilege if you are right."

Supermarkets were important to New Zealanders both as suppliers to them and buyers in them, Key said.

"It is a good idea for the Commerce Commission to look at it," he said, adding all participants could make their case.

He had not heard of the claims before Jones aired them yesterday, he said.

"I don't have any facts or any advice that they are correct."

MOUNTING BACKLASH

Using parliamentary privilege, Jones yesterday said Countdown management was demanding cash payments from Kiwi businesses on the grounds that its Australian shareholders were not happy with prior profitability.

‘‘They are demanding of Kiwi businesses payments, backdated cheques, and recompense, sir, for the losses the supermarkets assert they suffered last year,’’ Jones told Speaker David Carter in Parliament.

‘‘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 suppliers had sworn him to secrecy and were living in fear, having been told by Countdown ‘‘if you breathe one word of this, we will blacklist you’’.

Describing the tactics as ‘‘Mafioso’’, Jones said they were the type of behaviour that fictional gangster Tony Soprano would be ‘‘very proud of’’’.

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Following the claims Jones delivered a letter to the Commerce Commission asking for an investigation into New Zealand’s supermarkets, something Labour has promised if it wins the election.

Minutes after Jones made the statement, Katherine Rich, chief executive of the Food and Grocery Council, issued a release saying that the organisation was aware of ‘‘a number of incidents’’ where members had been asked for retrospective payments.

‘‘We have raised our general concerns about this practice with the supermarket chain involved. This is a serious issue that is new to the New Zealand grocery sector and we view it as an unwelcome development.’’

Dave Chambers, managing director of Countdown’s owners Progressive Enterprises, later issued a statement rejecting Mr 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,’’ he said, adding that the company would ‘‘fully cooperate with any enquiries from the Commerce Commission’’.

Countdown had already faced calls for a boycott in the wake of complaints from Kiwi suppliers that their products were being removed from supermarket shelves across the Tasman as Progressive’s Australian brand Woolworths engages in a fierce ‘‘buy Australian made’’ campaign.

On Tuesday Chambers said it was ‘‘upsetting’’ to hear that some people did not want to shop at Countdown, as he insisted there was no ban on Kiwi products in Australia and it was passing feedback onto Woolworths.

But calls for shoppers to avoid Countdown appeared to be growing. Last night a Boycott Countdown Facebook page had 2000 ‘‘likes’’, more than double what it had earlier in the morning.

Jones himself called for shoppers to avoid Countdown, saying he hoped consumers across the country would not support the importation of a ‘‘corrupt culture’’ by Australian shareholders into New Zealand business.

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

- BusinessDay

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