Warehouse disappointed Commerce Commission rejects Weet-Bix complaint

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Boxes of Weet-Bix in a shopper’s basket at The Warehouse.
Photo: RNZ / Tom Taylor

Retailer The Warehouse says it is disappointed the Commerce Commission has dismissed its complaint over food maker Sanitarium’s decision to quit supplying it with Weet-bix breakfast cereal, last October.

Warehouse chief executive Nick Grayston said the commission decided the Weet-Bix supply was disrupted over a short duration and therefore did not amount to a breach of the law.

“Now, in our view, the short duration was a result of the public and customer outcry after we shared what happened,” Grayston said, adding The Warehouse was selling Weet-Bix at a discount to the dominant two grocery chains, Woolworths and Foodstuffs.

“We had lots of conversations beforehand with [Sanitarium] where we gave them ample opportunity not to cut our supply.

“And so we don’t believe that, without that [public] outcry, Sanitarium would have changed their mind.”

He said the commission’s decision offered no deterrent.

“The lack of action does nothing to dissuade others from thinking they can get away with it.

“There’s no guarantee or disincentive that this situation won’t happen with any other supplies.”

Grayston said the grocery market would continue to be dominated by the two large supermarket chains, as long as they controlled wholesale distribution.

“All in all, it doesn’t offer much hope for any participant trying to grow or make positive change in the grocery sector and be able to offer better value for distressed customers.”

He said the government needed to intervene to level the playing field.

RNZ was awaiting the commission’s comment on its decision. However, in a written response to The Warehouse, the commission said it had no evidence to suggest Sanitarium’s conduct was intended to substantially lessen competition.

“In particular, the conduct was short in duration, with Sanitarium confirming that it would recommence supply within two working days of supply ceasing,” the commission said, adding that supporting competition in the grocery sector was a priority.

The Warehouse reported a first-half loss on Wednesday, with sales down 5 percent.

‘Choking on their expensive Weet-Bix’

The Grocery Action Group, established by former Consumer NZ chief executive Sue Chetwin, said shoppers would be “choking on their expensive Weet-Bix” following the decision.

“The commission’s lethargic response and eventual dismissal is astonishing,” said interim secretary Ernie Newman (formerly chief executive of the Telecommunications Users Association).

“Even if it could not identify a specific offence, this was a perfect opportunity for the commission to highlight the fact that resale price maintenance, and commercial bullying to force selling prices upward, are unacceptable and illegal.

“It’s explanation that ‘the conduct was short in duration’ is absurd. It was public anger that forced the supplier to backtrack – that outcome is no credit to the commission.”

He called on the commission to reverse its decision, or at least publicly explain “why such an apparently blatant case of unfair practice has been allowed to go unpunished”.