Grocery suppliers have been reminded that they may likely breach the Commerce Act if they require retailers to charge above minimum prices for their goods.

Commerce Commission chair, John Small, said such a practice will affect consumers since “it can prevent retailers offering lower prices to compete for customers”.

An investigation by the commission uncovered instances of resale price maintenance by now-defunct retailer The Honest Grocer and three other grocery suppliers in the industry.

“Kiwi consumers and retailers lose out when suppliers set minimum prices for their goods.

“It makes it hard for new retailers who want to compete on price to enter the market – without that genuine competition, consumers miss out,” said Small.

Last month, The Grocery Industry Competition Act came into force and gave Commerce Commission new powers to regulate and monitor the grocery industry.

Under this, a Grocery Commissioner and a Grocery Supply Code have been introduced to check the imbalance in power between suppliers and retailers and solve any disputes which may arise.

“These measures will give confidence to suppliers who are negotiating with retailers, as well as to new and existing retailers looking to enter into supply agreements.”