Discrimination, Diversification and Information Disclosure (Mitigation Measures)
Regulation 8 sets out the purpose of the mitigation measures. KNZ must carry out its functions to best achieve the purpose of Regulation 8, in respect of the monitoring and enforcement of the following:
- When Zespri is purchasing kiwifruit, Zespri is prevented from treating growers differently when different treatment is not commercially justified (non discrimination rule)
- Zespri is constrained from using the capital available to it other than as necessary for its core business (non diversification rule), and
- Zespri is required to publish additional information to enable better evaluation of its performance (information disclosure).
The first two measures constrain Zespri in what it can do, and the third measure requires the publication of additional specified information by which Zespri’s performance can be better assessed.
Regulation 9 limits Zespri from unjustifiably discriminating in the way it purchases kiwifruit and sets the point of purchase of New Zealand grown kiwifruit at not earlier than FOBS (free on board ship).
This means that the regulations require Zespri to treat all growers alike when purchasing their fruit, unless there is commercial justification for doing otherwise.
Some of the reasons included in the Regulations as justifiable discrimination are product features, quality, quantity, timing, location, risk or potential returns.
The Non-Diversification rule, in Regulation 11 protects the providers of capital, by placing restraints on the use of that capital by Zespri.
Zespri must not carry out an activity, or own or operate assets requiring the use of capital unless that capital is necessary for the core business, and unless the risks are minimal, and unless the providers of capital agree. Click here for a definition of core business (in Regulation 2).
This provision constrains Zespri from embarking on activities, which, if unsuccessful, could result in detrimentally affecting the financial fortunes of shareholders and suppliers. The non-diversification rule does not apply either to the sale of up to 300,000 trays of NZ grown kiwifruit by Zespri in New Zealand, or sales of NZ grown kiwifruit to Australia.
KNZ monitors Zespri annually to ensure that it is in compliance with the Non-Diversification Rule.
The Information Disclosure Regime:
Regulations 12 to 15 provide for additional information disclosure, so that stakeholders are better informed to be able to evaluate Zespri’s performance. The additional disclosures include financial information, kiwifruit purchase conditions, and Zespri’s kiwifruit payment methodology.
Zespri’s Export Authorisation sets out the basis by which an affected person may register a complaint for KNZ to investigate. In respect of an alleged failure of Zespri to comply with the non-discrimination rule, the non-diversification rule and information disclosure requirements, written complaints can be investigated by KNZ, who may decide to initially undertake an informal enquiry action before undertaking any formal investigation.
Official Information Act
While there is no public money involved in the funding of KNZ, it is subject to the Official Information Act.
Any Official Information Act requests received by KNZ will generally be dealt with according to the Ministry of Justice official guidelines. A copy of these can be found here:
Official Information Act Request Guidelines
KNZ may charge for Official Information Act requests. It does this in accordance with the Ministry of Justice Charging Guidelines. A copy can be downloaded here.