New Zealand's watchdog formally announced Thursday that it will investigate allegations that the Australian-owned Countdown supermarket chain has been employing anti-competitive practices against New Zealand suppliers.

The announcement is the latest development in a trans-Tasman spat over the practices that New Zealand suppliers say exclude them from Australian-owned supermarket shelves.

New Zealand's Commerce Commission last week offered confidentiality to anyone with information on the allegations, which were voiced in Parliament by opposition Labor Party economic development spokesperson Shane Jones.

The commission renewed its pledge of confidentiality Thursday, saying in a statement that the investigation into the buying practices of Progressive Enterprises, which owns the Countdown chain, was expected to "take a number of months."

Commerce Minister Craig Foss welcomed the investigation, saying that it was appropriate given the nature of the allegations.

"The Commerce Commission is the appropriate body to consider these allegations and I urge anyone with concerns around these allegations should contact the Commerce Commission immediately," Foss said in a statement.

Jones said the investigation was "a win for ordinary Kiwis, businesses and consumers."

"I urge the supermarkets to cooperate fully with the inquiry and any executives to appear if asked. If not, I expect the Commerce Commission to use its powers under the Fair Trading Act to require information to be supplied," Jones said in a statement.

Jones had claimed suppliers were too scared to go public in case they were blacklisted by the chain, which is one of only two main supermarket groups in New Zealand.

Progressive Enterprises has denied the allegations, which have fuelled a New Zealand social media campaign for a boycott of its stores.

Anger towards the chain started with reports that Australia's Woolworths, which is the parent of Progressive, and Coles groups, the two main supermarket chain owners in Australia, were refusing to stock New Zealand-made products as part of a "Buy Australian" campaign.