Woolworths has been warned that it may have breached the Grocery Industry Competition Act when delisting products in New Zealand stores.

The New Zealand Commerce Commission administers compliance with the Act, which tackles the relationship between suppliers and supermarkets, obliging companies to be more transparent when delisting products from their shelves in an effort to support small suppliers.

Formed in 2023, the Act will add the Grocery Supply Code in May. Failure to follow the code could result in penalties, the commission said.

The regulatory body has been investigating the product-range review processes of major supermarkets to ensure they were meeting their obligations under the code. 

“Through this process, we identified and investigated instances where we considered Woolworths New Zealand was at risk of not meeting its obligations,” a spokesperson added. “After this investigation, we issued Woolworths New Zealand with a warning for what we believe is a likely breach of the Grocery Industry Competition Act, noting that only a court can determine if a breach has occurred. Woolworths has since updated its processes to meet its obligations.” 

NZCC head of groceries, Alice Hume, said the action followed concerns raised by suppliers.

“The possibility of products being removed from shelves is a significant weight on suppliers that can reinforce the power imbalance between major supermarkets and smaller suppliers,” she added.

“The risk of losing market access can lead to suppliers accepting conditions that aren’t beneficial to them, and a lack of trust about how supermarkets make these decisions.

“The code plays a crucial role in levelling the playing field between the major supermarkets and smaller suppliers, so we take compliance very seriously.”

Hume said the NZCC is continuing to review the ranges on offer at supermarkets, asking any concerned suppliers to contact the commission.