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New Zealand’s biggest supermarket business has been fined $3.25 million for imposing anti-competitive land covenants to try to block competition in the lower North Island.

The fine for Foodstuffs North Island is the biggest imposed for anti-competitive land covenants.

The Commerce Commission said the High Court at Wellington imposed the fine.

It said the co-operative’s actions were called “deliberate” and serious and showed an effort to hinder rivals from opening new stores or expanding existing ones in Wellington’s Newton and Petone as well as in south Napier’s Tamatea.

Justice Paul Radich said the conduct gave rise to serious competition issues and reflected a deliberate effort to hinder competitors.

“The covenants were of very long duration, up to 99 years, and lodged with the purpose of hindering competitors in local towns and suburbs where consumers buy their groceries,” said John Small, commission chairman.

“By blocking other supermarkets from opening new stores or expanding existing ones, the covenants hindered competition for Kiwi shoppers,” he said.

In June, the commission said parties had entered into a settlement to resolve proceedings on terms acceptable to them.

Small said then: “This is a vital $25 billion sector, which impacts every Kiwi consumer. The covenants were of long duration, and we allege were lodged with the purpose of hindering competitors in local towns and suburbs where Kiwi consumers buy their groceries.”

The proceedings follow an investigation into the conduct which emerged during the commission’s market study into the grocery sector, completed in March 2022.

The study identified that the use of covenants on land, or in leases by the major retailers, was limiting the number of sites available to competitors.

Small said that in August 2021, Foodstuffs North Island committed to stop using restrictive land covenants and exclusivity provisions in leases and in June 2021 had already started a process to identify and remove any such clauses in existing tenancy contracts.

The Commerce (Grocery Sector Covenants) Amendment Act 2022 has also made certain grocery-related covenants prohibited and unenforceable.

This legislation was a recommendation from the commission’s market study into the grocery sector.

Anne Gibson has been the Herald’s property editor for 24 years, written books and covered property extensively here and overseas.