The Commerce Commission has released a draft report outlining initial findings and recommendations from its review of the Grocery Supply Code 2023. Recommendations include a prohibition on regulated grocery retailers charging payments for wastage occurring while groceries are within a retailer’s control, and a prohibition on charges relating to retailer business activities such as merchandising.

For general information about the Grocery Supply Code and the background to the Commerce Commission’s review, refer to our earlier article on this topic or reach out to us directly.

Retailer charges to be axed entirely?

‘Wastage’ and ‘business activity’ charges are likely to be on the chopping block unless the Commerce Commission receives industry feedback convincing it otherwise.

In its draft report, the Commerce Commission highlights concerns from suppliers about these charges, which are currently prohibited (in the case of wastage, only where wastage occurs while groceries are within a retailer’s control) unless a supplier agrees with a retailer to pay them. Other criteria, such as the reasonableness of a payment in the circumstances, also apply.

The Commission’s view is that these ‘carve out’ clauses may provide limited protection to suppliers, and may be used unfairly, given the pressure suppliers may be under to agree to terms and retain their supply contracts. To combat this, it has proposed to place a blanket prohibition on these charges, by amending clauses 14 and 16 of the Code, consistent with the approach taken to ‘stocking fees’ in the current Code (although stocking fees are permitted in very specific circumstances).

If implemented, the effect of this change will be that no such charges can be enforced by retailers from the date the new Code comes into effect.

Other potential changes

Proposed amendments to other Grocery Supply Code clauses include:

• Retailers must keep records in relation to their use of other ‘carve out’ clauses where conduct is prohibited unless agreed to by a supplier – this affects clause 9 (unilateral variation), clause 15 (stocking fees) and clause 17 (funding promotions).
• Suppliers must be able to obtain an itemised summary of any payment set offs applied by retailers during each financial quarter (clause 12).
• Retailers must pay suppliers the difference where products are ordered at a promotional price, but sold to consumers at a non-promotional price, to combat issues such as deliberate over-ordering of promotion-priced items (clause 20).
• A new provision explicitly prohibiting retaliation in response to suppliers exercising rights under the Code.

Further feedback opportunity and next steps

The Commerce Commission is seeking views and comments on its draft report by 5pm on 18 July 2025. A final report will then be submitted to MBIE by 28 September 2025 and made publicly available soon after that date.

At this stage, the Commerce Commission intends to publish a new Grocery Supply Code, which will come into force six months after any decisions relating to its contents are made. Based on the final report deadline, this effective date is likely to be no earlier than the end of March 2026.

A one month grace period will then apply after the new Code takes effect, to give retailers the opportunity to offer variations or new agreements to suppliers to make them consistent with any new Code requirements.

Talk to the experts

Hayley Miller and her team are on hand if you would like assistance with providing feedback on the Commerce Commission’s draft report. You can also reach out to them for practical advice on your rights and obligations under the Grocery Supply Code, or support with drafting, reviewing and negotiating grocery supply agreements. Our competition law expert David Campbell can also advise on broader competition issues relating to the grocery sector.

This article was written by Ashleigh Ooi, Senior Associate, in our commercial, technology and privacy team.