The Government has today launched a new "Grocery Code of Conduct", aimed at enforcing fair conditions for supermarket suppliers.
The Grocery Commission will act as a watchdog to enforce the new rules.
"The big supermarket chains have not been treating local suppliers fairly," Commerce and Consumer Affairs Minister Duncan Webb said.
"They have been taking advantage of their dominance and imposing unreasonable terms and conditions.
"We are calling time on their poor behaviour."
The new measures will force companies to use plain English in supply contracts, to pay suppliers on time, and to deal "in good faith".
If the new rules are broken, penalties could include the greater of either 3% of turnover or $3 million. Individuals could be fined up to $200,000.
"The big supermarket chains have not been treating local suppliers fairly," Commerce and Consumer Affairs Minister Duncan Webb said.
"It's entirely reasonable and hardly too much to ask," Webb said.
"Local suppliers have been stretched for a long time, and that's stifled innovation and the development of our food supply chain.
"Establishing this Grocery Code of Conduct is another critical step in the Government's reform of the grocery sector to make it fair for consumers and suppliers."
The code will come into force on September 28 and "initially apply to the two big supermarket chains", Woolworths and Foodstuffs.
Supermarkets 'making way too much money'
On Breakfast this morning, Webb said: "The Commerce Commission said in its market study that the supermarkets are making way too much money. That's why, for the past couple of years, we've been working on this.
"At one end, the consumers aren't getting a fair deal. At the other end, New Zealand suppliers who are making the food, growing the vegetables and so on, are not getting a fair deal from the supermarkets either."
Webb said good faith is "the guts of" the new code.
"We should see prices come down as part of the whole package we've done around supermarkets over the past two years."
He was hopeful that Kiwis would see "the green shoots of competition pretty much immediately".
"We're seeing the beginning of it right now, but I want to be clear, there's still work to do," Webb said.
"There's a way to go before we get to genuinely fair prices for everyone."
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