It's on: Commerce Commission launches Countdown investigation

"The Commission can confirm that it is now holding an investigation into the allegations made against Countdown supermarkets," spokesman Gordon Irving told NBR this afternoon.

The regulator had been assessing whether to formally investigate complaint laid by Labour front-bencher Shane Jones last week; it has now decided to push forward.

The investigation will involve seeking a wide range of information from a variety of sources, including organisations from all areas of the supermarket sector. It is expected to take a number of months.

The Commission's announcement follows Mr Jones making new allegations under Parliamentary privilege yesterday against the Countdown and Ralph Waters, chairman of Woolworths (the Australian company that owns Countdown's parent, Progressive Enterprises).

In a statement sent to NBR, Mr Waters said, "I completely reject Mr Jones' allegations and find his insinuations highly offensive. My contribution to business in New Zealand speaks for itself. For the last 13 years I have worked at a senior level with companies such as Fletcher Building, Fisher and Paykel Appliances, Fonterra and Westpac New Zealand. I am extremely disappointed in Mr Jones' behaviour. Attacking an individual and business through the Parliament is no way for any politician to deal with an issue of concern or engage with the business sector."

The Commission did not immediately respond to NBR's query about how it would tackle claims against Woolworths in regards to alleged pressure it applied to Countdown's NZ suppliers, including whether it would liaise with its transtasman counterpart, the ACCC.

A Countdown spokeswoman told NBR, "We believe it’s important to let this process take its course, and we will fully cooperate with any enquiries.”

Mr Jones has alleged the supermarket chain has demanded suppliers pay extra, restropective stocking fees, and threatened to blacklist those who talk.

In Parliament, he alleged Mr Waters had "leaned on" Kiwi suppliers.

He also read out part of an email which said Countdown demanded tens of thousands from a supplier by 5pm that day as payment for insufficient sales the previous month on their product lines.

He planned to forward the email to the Commerce Commission if it promised to protect the anomynity of the supplier (the regulator has already said it will keep supplier's identity confidential, and encouraged suppliers to get in contact*).

One supplier had to pay 7% of their turnover to "get anywhere near" Countdown in New Zealand, but when he approached suppliers in New Zealand they hadn't heard of the policy, Mr Jones said.

Another company with 30 employees and a $4.5 million turnover was forced to close and the owners are now living in Australia after "standing up to Countdown's tactics" the Labour MP alleged.

Mr Jones has gained tacit backing from ex-National MP turned Food and Grocery Council CEO Katherine Rich, who last week said, "We're aware of a number of incidents where our member companies have been asked for retrospective payments. We have raised our general concerns about this practice with the supermarket chain involved. This is a serious issue that is new to the New Zealand grocery sector and we view it as an unwelcome development."

He's also backed by NBR readers - or at least to the degree that a poll of paid online subscribers found 75% believed the Labour MP over Countdown.

* This afternoon, the regulator clarified its position on anonymity In a statement it said, "Anyone who has information relevant to the allegations is encouraged to contact us on 0800 943 600. They can request that the Commission keep their identity and/or the information provided confidential. The Commission will not disclose the identity and/or information unless consent is given or the Commission is required to by law. If confidentiality is a concern then it should be raised when first contact is made with the Commission."