Foodstuffs North Island (FSNI) and Gilmours Wholesale are facing civil proceedings filed by the Commerce Commission over their alleged cartel conduct.

The commission said it had investigated agreements signed by FSNI and Gilmours with a national grocery supplier, regarding the supply of products to a hospitality customer. 

The supplier and the customer both have considerable volumes of business with FSNI and Gilmours. When FSNI and Gilmours discovered the supplier and customer had established a direct trading relationship, they persuaded the supplier to re-route that business through them.

The ComCom considered the action as cartel conduct, which is a breach of the Commerce Act. 

According to the regulator, a cartel is where two or more businesses agree not to compete with each other. Cartel conduct can take many forms, including price fixing, allocating customers, rigging bids or restricting the output of goods and services. 

“We take allegations of cartel conduct very seriously. Cartel conduct harms consumers through higher prices or reduced quality, and it harms other businesses that are trying to compete fairly,” said ComCom chair John Small.

“In this instance, the supplier wanted to provide a competitive supply channel, but this was stopped by the agreement with FSNI and Gilmours.”

In addition, the commission is filing proceedings against the two companies for breaches of the Grocery Industry Competition Act, alleging they obstructed the supplier’s ability to sell groceries to the customer in question and did not deal with the supplier in good faith.

Earlier this month, Foodstuffs North Island received a warning from the Commerce Commission over “uncooperative and unreasonable” treatment of a supplier.