Foodstuffs North Island (FSNI) and Foodstuffs South Island (FSSI) have revealed their intent to appeal the New Zealand Commerce Commission's decision to block their proposed merger.
The co-operatives, which own grocery brands such as PAK’nSAVE, New World and Four Square, aim to merge into a single New Zealand-owned co-op. They assert that combining into a single nationwide co-op would lead to better prices for consumers.
In December 2023, FSNI and FSSI jointly filed for clearance with the Commerce Commission.
The New Zealand regulator issued a preliminary statement in January 2024 and postponed its decision in June.
In October, the commission declined to approve the merger, citing concerns about reduced competition.
The boards of both co-ops have decided to file a Notice of Appeal with the High Court, arguing that the commission's decision is incorrect.
Foodstuffs North Island CEO and CEO-designate of the proposed co-op Chris Quin stated that the merger is required to provide even more competitive prices for customers.
Quin stated: “Customers have been asking for better value at the checkout, and we believe this merger is the single biggest way we can keep improving to achieve that.
“By merging our resources, we can make our buying and operations more efficient, which ultimately translates into better prices for New Zealanders.”
The commission raised concerns that the merger would reduce competition between the co-operatives in purchasing groceries from suppliers.
However, the co-ops argue that they do not compete in purchasing as they cater to separate geographic markets, meaning their buying activities do not overlap.
Foodstuffs South Island CEO Mary Devine said: “Combining our operations allows us to streamline operations, reduce overheads and better invest in new technology and services that our customers want. This isn’t just a merger - it’s an evolution to ensure we remain competitive and sustainable for the future.”
The commission also feared reduced profit margins for suppliers, but the co-ops believe that the merger would benefit consumers without harming suppliers.
They argue that the merger aligns with the Commerce Act's goal of promoting competition for consumers' long-term benefit.
The commission also considered the potential for increased "co-ordination" with Woolworths.
However, the co-ops assert that the merger will not alter their grocery retail strategies, which include multiple national brands and locally operated stores.
Pending the appeal's outcome, FSNI and FSSI will continue to focus on providing quality, value and convenience to New Zealanders.
