MPs share ‘deep concern’ that supermarkets may seek to profit from scrapping pacts

MPs recommended strengthening a proposed crackdown on supermarket land covenants, but expressed ‘deep concern’ that supermarkets could seek to profit from the proposed ban.

Parliament’s select committee on economic development, science and innovation has considered a proposed change to the law to prevent Countdown and Foodstuffs from using the terms and conditions of land deals and tenancies to hinder competition .

The change to the law, as originally worded, would only prohibit supermarket groups from using such agreements to restrict competition from other “retail grocery stores”.

The committee recommended that it be widened instead to prevent restrictions being imposed on any retailer who might compete with the supermarket.

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Food and Grocery Council chief executive Katherine Rich told the committee earlier this month that supermarket chains had sought the right to impose restrictions on a wide range of retailers, including those selling clothes , sporting and fitness goods, household appliances, hairdressing services, and arts and crafts. .

But at the same time as suggesting tougher legislation, the select committee feared supermarket groups were using their “theoretical loss of exclusivity” to negotiate lower rents with their landlords.

“All members of this committee share a deep concern that affected designated food retailers could use their market power to attempt to profit financially from the passage of this bill,” the committee said.

“In our view, these results would defeat the purpose of the bill.”

MPs fear that after decades of benefiting from covenants, supermarket owners could now demand compensation from landlords for their forced eviction.

Provided

MPs fear that after decades of benefiting from covenants, supermarket owners could now demand compensation from landlords for their forced eviction.

But he decided not to specifically exclude such compensation claims, suggesting that the Fair Trade Act could instead be used to prevent “unfair dealing”.

Foodstuffs North Island general manager Chris Quin said he would not be seeking compensation from owners following the change in the law, while Countdown said he may struggle to comment. immediate.

Maori National Authority chairman Matthew Tukaki told the committee it was important that the change in the law did not leave “gaps”.

The committee recommended a number of amendments to address this concern and also proposed an amendment to the law giving the Commerce Commission broad powers to demand copies of all covenants and related agreements entered into by supermarket chains. .

Rich appeared to shock the select committee earlier this month by revealing that a tenancy agreement – ​​believed to have been drawn up for Countdown – had required a landowner to agree to oppose resource consent requests that conflicted to the interests of the supermarket group.

In its report, the commission did not propose to specifically ban such clauses, but described it as an example of “anti-competitive behavior”.

Such terms could be prohibited under the Resource Management Act which states that this act should not be used “to oppose business competitors”, but this should be assessed “on a case-by-case basis”, a he declared.

The Commerce Commission said last week it had prioritized supermarket covenants for further investigation.

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