New Zealand Supermarket Giants Face Criminal Prosecution for Deceptive Pricing
Both supermarket chains in New Zealand, Woolworths and Pak’nSave, are headed to court over inaccurate pricing and misleading specials.
New Zealand’s Prime Minister Christopher Luxon says people should the competition regulator’s decision to bring criminal prosecutions against supermarkets for alleged misleading pricing and advertising practices.
“We want to make sure all of our sectors are more competitive, whether it’s banking or supermarkets,” Luxon said. “We’re expecting the Commerce Commission to do their job, and it’s great to see they’ve taken action this morning.”
The Commission said the supermarkets which had been charged may have breached the Fair Trading Act.
Commission Deputy Chairperson Anne Callinan said supermarkets had “long been on notice about the importance of accurate and clear pricing and specials,” and the Commission was not satisfied with the continuing issues it’s seeing across the industry.
Traffic round Pak’nSave in Mt Albert of Auckland, New Zealand on April 14, 2017. Phil Walter/Getty Images
Shoppers Need Confidence in Prices: Commission
“Shoppers should have confidence that the price they see will be the price they pay, and [that] specials really are special,” Callinan said.
“Pricing accuracy is a consumer right and an expectation of a competitive market. The major supermarkets are large, well-resourced businesses that should invest the time and effort to get pricing and promotions right.
“The charges we’re filing against major supermarket brands are to remind all supermarket operators that we expect them to fix ongoing pricing accuracy issues and implement better processes to prevent issues like these in the future,” Callinan said.
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Grocery Commissioner Pierre van Heerden said the Commission’s work to introduce a mandatory disclosure standard will make it easier to identify issues in the future.
“The standard will require the major supermarkets to regularly disclose information about customer complaints, including around pricing and promotional issues,” van Heerden explained.
“The major supermarkets don’t have consistent processes for recording customer complaints. The [resulting] lack of clarity and reporting means supermarkets can’t identify potential compliance issues within their businesses.
Woolworths’ Response
Woolworths NZ said it was not clear how extensive the charges would be, but it was introducing new technology to minimise pricing mistakes. It would review the legal proceedings once they were filed.
The company said it had been cooperating for some time with the Commission over specials and other pricing matters.
“We know how important it is that our customers can trust that the prices we advertise, or have on our shelf labels, are what they pay at the checkout,” Woolworths NZ Managing Director Spencer Sonn said.
“But sometimes errors occur. To address this, Woolworths New Zealand has a long-standing and market-leading refund policy.”
Electronic Shelf Labelling Being Introduced
The executive said if a customer is charged more for a product than the price advertised or displayed on shelves, they will receive a refund and get to keep the product.
“More broadly, we are also in the process of introducing electronic shelf labels in all of our stores to ensure that there are no paper-based shelf label errors. To date, 130 of our 186 stores have electronic shelf labels in place,” Sonn said.
Foodstuffs, the cooperative owned by the operators of Pak’nSave and New World supermarkets, said its affected stores were taking the matter seriously and fully cooperating with the Commission.
“Foodstuffs North Island’s stores process millions of transactions a day, and while errors are relatively rare, we agree that any inaccurate pricing is unacceptable,” a Foodstuffs spokesperson said. “We are working hard to ensure that the price customers see on shelves is always what they pay at checkout, and that all specials offer clear savings.
“If a customer believes they haven’t been charged the correct price, we encourage them to let our store teams know so we can refund them directly if they’ve been overcharged, or they can contact our customer service team.”
In September, the Commission announced it would seek to introduce a mandatory code to regulate the wholesale market for groceries, and it launched an inquiry into whether further, stricter regulation was needed.
The Commission says it has other ongoing investigations into supermarket operators.
