Commerce Commission extends its decision due date for the Foodstuffs merger for the second time due to ‘unresolved issues’, will now release final decision in October

The Commerce Commission has pushed out its decision on the merger of Foodstuffs North Island and Foodstuffs South Island for a second time, with the new decision date set for October.

ComCom was supposed to announce on Friday if it had cleared or declined the merger of the grocery cooperatives after pushing out its original deadline of the May 31 to the June 21.

This means the final decision on if Foodstuffs North Island (FSNI) and Foodstuffs South Island (FSSI) are allowed to merge into one co-op won’t be revealed until October 1.

The Commerce Commission said on Friday that the deadline had been extended because it is planning to release a Statement of Unresolved Issues regarding the merger application.

“The Statement of Unresolved Issues will be published on the Commission’s case register in due course, and will outline the Commission’s provisional competition issues with the proposed merger,” ComCom said.

“A Statement of Unresolved Issues is not a final decision and does not mean that the Commission intends to decline or clear the merger.”

ComCom announced in December 2023 it had received a merger clearance application from Foodstuffs North Island and Foodstuffs South Island.

Since then, various submissions on the merger have been published on ComCom’s website in its case register. Most of the submissions have been against the merger being given clearance.

Some of the merger’s most vocal critics include The Warehouse, the Food and Grocery Council (FGC), and the recently formed Grocery Action Group (GAG). 

FGC, which represents manufacturers and suppliers behind food, beverage, and grocery brands, said in a May submission that the Foodstuffs merger proposal would likely decrease competition in relevant markets due to the heightened buying power resulting from the merger.

GAG is concerned the merger would lead to a “considerable lessening of competition in an already failed market.”

The Warehouse, which has been trialing groceries in its retail stores since 2021 following a failed attempt in the mid-2000s, argued in its submission the Foodstuffs merger won't result in more affordable groceries for NZ consumers.

The two Foodstuff co-ops have said in response to critical submissions that preventing the proposed merger will not “diminish competition” – but will mean continued higher costs for the two parties.

Economics firm HoustonKemp, commissioned by Chapman Tripp on behalf of the two Foodstuffs cooperatives, have submitted two reports to ComCom that grocery coordination won't be "enhanced" if the Foodstuffs merger goes ahead.

All in favour

Foodstuffs announced in early June that 100% of its co-op members had voted in favour of a merger.

Chris Quin who is FSNI CEO and the designated Chief Executive of the proposed national Foodstuffs co-op, said in early June the merger would change Foodstuffs' governance and support for its stores by simplifying operations and reducing costs.

“That’s a great thing for New Zealand as too few of our key industries remain New Zealand owned, and we’re up against Australasian and global competitors,” he said.

Quin added that Foodstuffs welcomed competition and hoped the NZ business environment “enables more”.

FSNI is the larger co-operative of the two and is owned by 332 store owner-operators who are all based in the North Island. Members in the North Island co-op operate under grocery brands New World, PAK’nSAVE and Four Square.

FSSI is owned by 198 store owner-operators who are all based in the South Island and operate under New World, PAK’nSAVE, Four Square and also Raeward Fresh and On the Spot.