1 00:00:00,160 --> 00:00:03,080 Speaker 1: Right now. Foodstuff's North Island you might have heard about 2 00:00:03,120 --> 00:00:07,080 Speaker 1: this in the news today and it's subsidiary Gilmore's Wholesale, 3 00:00:07,240 --> 00:00:09,479 Speaker 1: are being taken to court for what the Commerce Commissioner 4 00:00:09,520 --> 00:00:13,480 Speaker 1: is calling cartel conduct. The ComCom ledges that the two 5 00:00:13,520 --> 00:00:17,960 Speaker 1: supermarkets pressured a grocery supplier to sell to them rather 6 00:00:18,200 --> 00:00:22,239 Speaker 1: than directly to another business. Foodstuffs North Island is denying 7 00:00:22,239 --> 00:00:26,000 Speaker 1: any wrongdoing in its practices. Andy Matthews is a competition 8 00:00:26,079 --> 00:00:28,800 Speaker 1: lawyer at Matthew's Law and is with me tonight. 9 00:00:29,880 --> 00:00:30,040 Speaker 2: Hi. 10 00:00:30,120 --> 00:00:31,800 Speaker 1: Andy, right, I'm good to have you on this show. 11 00:00:31,840 --> 00:00:35,839 Speaker 1: You very well, Thank you. What do you make of 12 00:00:36,120 --> 00:00:38,720 Speaker 1: the case that the Commerce commission Well, what we know 13 00:00:38,880 --> 00:00:40,120 Speaker 1: of the case that they're taking. 14 00:00:41,360 --> 00:00:42,560 Speaker 3: Yeah, look, that's a good point. 15 00:00:42,600 --> 00:00:46,959 Speaker 2: We don't have the details and it's just allegations at 16 00:00:46,960 --> 00:00:49,720 Speaker 2: this stage until it goes through the court process. But 17 00:00:50,840 --> 00:00:54,200 Speaker 2: I guess look backdrop, there's a few things going on. 18 00:00:55,200 --> 00:00:57,800 Speaker 2: New Zealand law has some of the broadest sort of 19 00:00:57,880 --> 00:01:02,000 Speaker 2: cartel laws in the world. What is defined as a 20 00:01:02,000 --> 00:01:05,120 Speaker 2: cartel provision and a contract arrangement or understanding is a 21 00:01:05,120 --> 00:01:08,320 Speaker 2: lot broader than you or I might have thought before 22 00:01:08,319 --> 00:01:10,240 Speaker 2: this law was passed, and certainly even a lot of 23 00:01:10,280 --> 00:01:12,480 Speaker 2: lawyers get a bit confused on this. It's pretty much 24 00:01:12,520 --> 00:01:19,600 Speaker 2: any agreement between actual or potential competitors which relates to price, quality, capacity, supply, 25 00:01:19,680 --> 00:01:20,479 Speaker 2: all of those things. 26 00:01:20,720 --> 00:01:23,520 Speaker 3: And what it means is pretty much any agreement. 27 00:01:23,120 --> 00:01:26,280 Speaker 2: With an actual potential competitor probably has a cartel provision. 28 00:01:26,920 --> 00:01:30,559 Speaker 2: Then it's up to then to the party who's entered 29 00:01:30,560 --> 00:01:35,240 Speaker 2: into the alleged cartel provision to demonstrate that an exception 30 00:01:35,360 --> 00:01:37,319 Speaker 2: in the Commerce Act applies and that there are ones 31 00:01:37,360 --> 00:01:40,440 Speaker 2: for sort of collaborations to joint ventures, you know, joint 32 00:01:40,440 --> 00:01:45,640 Speaker 2: buying groups, but also something called vertical supply, and it's 33 00:01:46,400 --> 00:01:47,160 Speaker 2: the onners. 34 00:01:46,880 --> 00:01:49,040 Speaker 3: Is on the defendant. But what we don't know here 35 00:01:49,400 --> 00:01:50,240 Speaker 3: is whether. 36 00:01:51,600 --> 00:01:53,360 Speaker 2: You know, food stuff and Gilwolls have just gone to 37 00:01:53,400 --> 00:01:56,360 Speaker 2: this plat and said, hang on, you supply us, we 38 00:01:56,400 --> 00:01:59,320 Speaker 2: supply them, you also supply them, how but we enter 39 00:01:59,320 --> 00:02:02,800 Speaker 2: an exclusive supply agreement and we think that's a protected 40 00:02:02,960 --> 00:02:05,240 Speaker 2: vertical supply under this exception in the Commerce Act. 41 00:02:05,480 --> 00:02:07,680 Speaker 3: I'm just speculating. I'm not saying it does. I'm not 42 00:02:07,720 --> 00:02:08,520 Speaker 3: saying it doesn't. 43 00:02:09,080 --> 00:02:15,320 Speaker 2: But the Commerce Commission is obviously incredibly concerned about independent 44 00:02:15,440 --> 00:02:19,480 Speaker 2: supply to that doesn't have to go through the supermarket, 45 00:02:19,560 --> 00:02:23,480 Speaker 2: so that say, for example, a new supermarket player can 46 00:02:23,520 --> 00:02:27,320 Speaker 2: get direct access and suppliers are free to and free 47 00:02:27,360 --> 00:02:29,280 Speaker 2: of a fear. 48 00:02:29,080 --> 00:02:30,560 Speaker 3: Of sanction and those sorts of things. 49 00:02:30,600 --> 00:02:34,200 Speaker 2: And the commission's media release says that the supplier wanted 50 00:02:34,240 --> 00:02:39,120 Speaker 2: to supply the hospitality customer directly, but they were quote 51 00:02:39,240 --> 00:02:43,440 Speaker 2: persuaded to sell to food stuffs and Gilmore sort of 52 00:02:43,480 --> 00:02:46,720 Speaker 2: routed all that way rather than competing with food stuffs 53 00:02:46,720 --> 00:02:49,200 Speaker 2: to sell the product to the hospitality customer. 54 00:02:49,440 --> 00:02:52,600 Speaker 1: So, just speaking generally, let's move away from these two 55 00:02:53,200 --> 00:02:56,200 Speaker 1: businesses in particular. But if you wanted to defend, like 56 00:02:56,280 --> 00:02:59,760 Speaker 1: somebody comes along and says, right, you're being anti competitive 57 00:03:00,000 --> 00:03:04,120 Speaker 1: because you're stopping this business from being able to buy 58 00:03:04,160 --> 00:03:08,720 Speaker 1: the honey or whatever it is, then can your excuse be, well, 59 00:03:08,800 --> 00:03:13,000 Speaker 1: I'm I'm wanting to be the exclusive provider of this 60 00:03:13,160 --> 00:03:16,280 Speaker 1: product and that's why we're signing this deal, and you're 61 00:03:16,320 --> 00:03:18,079 Speaker 1: not allowed to sign a deal with someone else. Is 62 00:03:18,120 --> 00:03:22,160 Speaker 1: there a legitimate excuse, Well, it can be. 63 00:03:22,240 --> 00:03:23,880 Speaker 2: But taking a step back, as you raised a very 64 00:03:23,880 --> 00:03:26,959 Speaker 2: good point, you talked about competition. Nowhere in my description 65 00:03:27,080 --> 00:03:30,520 Speaker 2: of the cartel prohibition. Did I mention competition? And the 66 00:03:30,600 --> 00:03:33,840 Speaker 2: reason is it's sort of as a type of law, 67 00:03:33,880 --> 00:03:36,480 Speaker 2: it's deemed to be bad no matter what. It doesn't 68 00:03:36,520 --> 00:03:40,640 Speaker 2: even talk about competition. There's nothing in the Cartel provision prohibition. 69 00:03:40,680 --> 00:03:42,080 Speaker 2: And this is where it's a bit weird. If a 70 00:03:42,080 --> 00:03:44,840 Speaker 2: bunch of doctors say let's reduce our prices and they 71 00:03:44,840 --> 00:03:49,000 Speaker 2: will agree that that is a Cartel provision. So then 72 00:03:49,120 --> 00:03:51,960 Speaker 2: there's also a general competition test. There's a misuse of 73 00:03:52,000 --> 00:03:54,200 Speaker 2: market power if it's anti competitive, and there are contracts 74 00:03:54,200 --> 00:03:57,160 Speaker 2: that are anti competitive and be surprising if the Commission 75 00:03:57,200 --> 00:03:59,880 Speaker 2: isn't isn't alleging that as part of its statement acclaim. 76 00:04:00,000 --> 00:04:03,080 Speaker 2: But the thing about the Cartel provisions, it's a bit 77 00:04:03,120 --> 00:04:04,119 Speaker 2: like the Fair Trading Act. 78 00:04:04,760 --> 00:04:05,720 Speaker 3: It's kind of they've got you. 79 00:04:05,760 --> 00:04:07,520 Speaker 2: If they've got you, they don't have to prove anti 80 00:04:07,520 --> 00:04:10,720 Speaker 2: competitive harm, just that you've entered this restrictive agreement. But 81 00:04:10,760 --> 00:04:13,880 Speaker 2: that's why the exceptions are so important. But I should 82 00:04:13,880 --> 00:04:16,520 Speaker 2: have mentioned you raised a good point is there's still 83 00:04:16,520 --> 00:04:18,800 Speaker 2: a general competition thing. So if they say no, no, it's okay, 84 00:04:18,880 --> 00:04:22,000 Speaker 2: it falls within the vertical supply exception. Well that's going 85 00:04:22,000 --> 00:04:23,640 Speaker 2: to be matter for the courts. It's new law. 86 00:04:23,760 --> 00:04:25,000 Speaker 3: The Commission have. 87 00:04:25,080 --> 00:04:29,120 Speaker 2: Quite a narrower perspective on what that exception covers to 88 00:04:29,200 --> 00:04:32,120 Speaker 2: some others and what's protected and what's not. 89 00:04:33,120 --> 00:04:35,120 Speaker 3: So the fallback is a competition argument. 90 00:04:35,600 --> 00:04:39,039 Speaker 1: Right, So is it would an exclusive deal be okay 91 00:04:39,160 --> 00:04:39,360 Speaker 1: or not? 92 00:04:40,320 --> 00:04:42,240 Speaker 3: Is that even? Well, it can be. 93 00:04:42,560 --> 00:04:44,920 Speaker 2: People do it all the time, but they do need 94 00:04:44,960 --> 00:04:47,360 Speaker 2: to be aware of the law and that the law 95 00:04:47,440 --> 00:04:51,040 Speaker 2: is really complex and really counterintuitive. Like if I start 96 00:04:51,080 --> 00:04:53,279 Speaker 2: by saying yes I did to you, Oh, any agreement 97 00:04:53,320 --> 00:04:55,920 Speaker 2: with a competitor has probably got a cartel. 98 00:04:55,600 --> 00:04:56,560 Speaker 3: Provision in it. 99 00:04:56,680 --> 00:04:59,720 Speaker 2: That's not that much of an exaggeration, and that's our 100 00:04:59,720 --> 00:05:01,560 Speaker 2: stuf points. So then you need to review it and 101 00:05:01,600 --> 00:05:05,320 Speaker 2: you go, does this fit within one of those exceptions? 102 00:05:05,640 --> 00:05:07,839 Speaker 2: Do we need to pull it back a bit so 103 00:05:07,960 --> 00:05:10,320 Speaker 2: that it falls within the wording of the law and 104 00:05:10,360 --> 00:05:11,960 Speaker 2: the sort of the the spirit of the law. 105 00:05:12,040 --> 00:05:13,960 Speaker 1: And it's quite a hard thing to prove. 106 00:05:15,520 --> 00:05:18,680 Speaker 3: Well, it could be. Yeah, this is the first case. 107 00:05:18,720 --> 00:05:21,840 Speaker 3: This is the first case testing this sort of stuff that. 108 00:05:21,600 --> 00:05:24,600 Speaker 2: That that I'm aware of, assuming that it's not settled, 109 00:05:25,040 --> 00:05:29,479 Speaker 2: because quite often these cartel cases are settled because it 110 00:05:29,520 --> 00:05:31,880 Speaker 2: can be it can be hard to to prove prove 111 00:05:31,960 --> 00:05:34,039 Speaker 2: that that it's okay. Look, I don't know whether this 112 00:05:34,080 --> 00:05:35,840 Speaker 2: is hard or not because I don't like you. I've 113 00:05:35,880 --> 00:05:38,440 Speaker 2: got a bit of a bit of a guide from 114 00:05:38,440 --> 00:05:42,240 Speaker 2: the Commission in terms of the media release. But it's 115 00:05:42,400 --> 00:05:45,839 Speaker 2: it's the Commissioner obviously taking it pretty seriously. They are 116 00:05:46,160 --> 00:05:49,960 Speaker 2: wanting to be a braver and boulder litigants as they 117 00:05:50,000 --> 00:05:51,880 Speaker 2: been asked to be by the Commission. It's fair to 118 00:05:51,920 --> 00:05:55,160 Speaker 2: say that hasn't they haven't. They haven't contested as much 119 00:05:55,200 --> 00:05:57,640 Speaker 2: through the courts on pure competition grounds. It's tended to 120 00:05:57,680 --> 00:06:00,760 Speaker 2: be these types of cartel cases. Then interesting thing about 121 00:06:00,760 --> 00:06:04,560 Speaker 2: this that you haven't asked about is, and having done 122 00:06:04,600 --> 00:06:08,279 Speaker 2: a bit of grocery work, I'm a bit of a 123 00:06:08,279 --> 00:06:11,080 Speaker 2: geek about this is there's something called literally the Geeker, 124 00:06:11,320 --> 00:06:14,159 Speaker 2: which is the Grocery Industry Competition Act, and that includes 125 00:06:14,640 --> 00:06:18,640 Speaker 2: a code of conduct and one of the big prohibitions, 126 00:06:18,880 --> 00:06:21,039 Speaker 2: or one of the big requirements, is that the regulated 127 00:06:21,080 --> 00:06:22,039 Speaker 2: grocery retailers. 128 00:06:22,040 --> 00:06:23,599 Speaker 3: So that's the two food stuff's. 129 00:06:23,320 --> 00:06:26,000 Speaker 2: Companies and we'll always have to act in good faith 130 00:06:26,040 --> 00:06:29,080 Speaker 2: in their dealings with suppliers. So for me, that's a 131 00:06:29,120 --> 00:06:34,760 Speaker 2: particularly interesting aspect to this because good faith is you know, 132 00:06:35,080 --> 00:06:37,240 Speaker 2: it's sort of one of those things we don't know 133 00:06:37,320 --> 00:06:39,520 Speaker 2: quite how our court interprets. 134 00:06:39,000 --> 00:06:41,279 Speaker 3: What's good faith and what's not good faith. 135 00:06:41,880 --> 00:06:44,880 Speaker 2: And I think the Commission have bided their time to 136 00:06:44,960 --> 00:06:47,680 Speaker 2: pick the case that they think is the right one. 137 00:06:47,720 --> 00:06:49,640 Speaker 2: And I don't think they will have issued you know, 138 00:06:49,640 --> 00:06:51,560 Speaker 2: we'll havn't issued the proceedings yet, but that said, they're 139 00:06:51,560 --> 00:06:53,839 Speaker 2: going to. I don't think they'll have done this lightly, 140 00:06:54,720 --> 00:06:57,040 Speaker 2: but I do wonder whether food Stuffs might say well 141 00:06:57,320 --> 00:06:58,960 Speaker 2: on vertical supply agreement. 142 00:06:59,120 --> 00:07:02,039 Speaker 1: It's okay, right, Andy, I'll keep an eye on that 143 00:07:02,120 --> 00:07:06,280 Speaker 1: geeker the geeker and when the case goes through court, 144 00:07:06,320 --> 00:07:09,040 Speaker 1: appreciate your time. This evening, Andy Matthews Competition Law with 145 00:07:09,120 --> 00:07:11,440 Speaker 1: us explaining that case. It's been taken by the Commerce 146 00:07:11,440 --> 00:07:16,280 Speaker 1: Commission against Foodstuffs North Island and its subsidiary Gilmore's Allsale. 147 00:07:16,960 --> 00:07:20,120 Speaker 3: For more from Heather Duplessy Allen Drive. 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