New Zealand Acts

COMMERCE ACT 1986 - SECT 28A

28A Certain grocery-related covenants are treated as prohibited and unenforceable

1 A covenant to which this section applies must be treated, for the purpose of section 27 or 28 (as the case may be), as having the purpose, or as having or being likely to have the effect, of substantially lessening competition in the relevant market.

2 This section applies to any of the following in which a designated grocery retailer has an interest:

a) a restrictive or positive covenant that has the purpose, or has or is likely to have the effect, of impeding the development or use of land or a site as—

i) a retail grocery store; or

ii) any other retail store that is likely to compete with a retail grocery store operated by the designated grocery retailer:

b) a restrictive or positive covenant, and the provisions of any other contracts, arrangements, understandings, or covenants, if—

i) the restrictive or positive covenant has 1 or more of the same parties as the contract, arrangement, understanding, or covenant; and

ii) taken together, the restrictive or positive covenant and the provisions have the purpose, or have or are likely to have the effect, of impeding the development or use of land or a site as—

A) a retail grocery store; or

B) any other retail store that is likely to compete with a retail grocery store operated by the designated grocery retailer:

c) an exclusivity covenant or other provision in a lease that has the purpose, or has or is likely to have the effect, of impeding another person from operating—

i) a retail grocery store; or

ii) any other retail store that is likely to compete with a retail grocery store operated by the designated grocery retailer:

d) an exclusivity covenant or other provision in a lease, and the provisions of any other contracts, arrangements, understandings, or covenants, if—

i) the lease has 1 or more of the same parties as the contract, arrangement, understanding, or covenant; and

ii) taken together, the exclusivity covenant or other provision in the lease and the provisions have the purpose, or have or are likely to have the effect, of impeding another person from operating—

A) a retail grocery store; or

B) any other retail store that is likely to compete with a retail grocery store operated by the designated grocery retailer.

3 However, this section does not apply to—

a) a covenant that is reasonably necessary for environmental impact reasons connected with a retail fuel site within the meaning of the Fuel Industry Act 2020 ; or

b) a covenant in respect of which the Commission has granted an authorisation under section 58 or given a clearance under section 65A .

4 In this section, unless the context otherwise requires,—  
"covenant" means any covenant or other provision referred to in subsection (2)    
"designated grocery retailer" means all of the following:  

a) Foodstuffs North Island Limited, Foodstuffs South Island Limited, and Woolworths New Zealand Limited:

b) a person that is designated as a designated grocery retailer by the Governor-General by Order in Council made under section 28C :

c) a person that is a successor to a person referred to in paragraph (a):

d) a person that is a franchisee, or a transacting shareholder (within the meaning of the Co-operative Companies Act 1996 ), of a person referred to in paragraph (a), (b), or (c):

e) a person that is an interconnected body corporate or associated person (within the meaning of section 47 ) of a person referred to in paragraph (a), (b), (c), or (d)

"exclusivity covenant" includes, without limitation, a right of first refusal  
"grocery product" means goods in any of the following product categories: bread, dairy products, eggs or egg products, fruit, vegetables, meat, fish, rice, sugar, manufacturer-packaged food, and medicine other than prescription medicine    
"retail grocery store" means a place at which a material part of the business being carried on is the business of supplying 1 or more categories of grocery products to consumers (for example, a butchery, fishmonger, bakery, or pharmacy).  

5 A designated grocery retailer
"has an interest" in a covenant—

a) if the person is or was a party to the covenant; or

b) if the person is or was a party to any contract, arrangement, or understanding that resulted in the giving of the covenant or to the inclusion of the covenant in a lease; or

c) if the person required, or is deemed by section 28(6) to have required, the giving of the covenant; or

d) if the person gives effect to, carries out, or enforces the terms or provisions of the covenant; or

e) if the person takes any action described in section 28(5) .

6 Subsection (1) does not limit any other provision of this Part.

7 If this section applies, the reference in section 61(6) to any lessening in competition that would result, or would be likely to result, includes any lessening that this section provides must be treated as resulting.

History: Section 28A: inserted, on 30 June 2022, by section 4 of the Commerce (Grocery Sector Covenants) Amendment Act 2022 (2022 No 35).