Foodstuffs North Island and Foodstuffs South Island own and operate more than 500 Four Square, New World and PAK'nSAVE stores and have applied to merge the two regions. Photo: Google Maps
The Foodstuffs grocery co-operatives are weighing up whether to appeal a Commerce Commission decision to block a merger of the two regional co-ops.
Foodstuffs North Island and Foodstuffs South Island own and operate more than 500 Four Square, New World and PAK'nSAVE stores and had applied to merge the two regions.
Earlier this month, the Commerce Commission declined the proposal, saying it would substantially lessen competition.
Foodstuffs North Island chief executive Chris Quin said the co-ops would focus the commission's reasonings for declining the application for clearance.
"We strongly believe the merger is the best option for making our business more efficient, keeping checkout prices as low as possible, and ensuring the co-ops are match fit to meet new grocery competition," Quin said.
"Merging our two co-ops will benefit customers, stores, suppliers and communities."
Quin said the merger application process should be a legal test, and he was satisfied the Foodstuffs co-ops met that test.
"Our submissions showed this merger wouldn't reduce competition in the retail markets because we're two co-ops in two separate islands," he said.
The co-ops were reviewing their options, with 20 days to give notice of an appeal.
"If we decide to take it further in the High Court, it will be because we haven't seen any new information or changes regarding the issues the Commission raised during the clearance process - issues we believe we thoroughly addressed - and we see no valid basis for its final decision."
The industry needed to keep evolving to respond to changing customer needs and competition, Quin said.
"For us, merging is the right way to do it, because we'll cut down on the duplication, complexity and additional cost of having two separate companies operating in two islands.
"Suggestions we would co-ordinate with any of our competitors are baseless and fail to appreciate how our business works and how competitive it is."
Foodstuffs South Island chief executive Mary Devine said Foodstuffs owner-operators backed the merger because they understood that being one nation-wide co-op would make the co-ops more efficient, agile and better able to meet customer needs.
"Operating as two regional co-ops divided by the Cook Strait no longer makes sense and isn't what other large players are expected to do," she said.
"The merger will allow us to think big about our shared vision and keep evolving to be a world-class co-op."
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