Commerce Commission Blocks Foodstuffs Merger Proposal

The Commerce Commission has rejected Foodstuffs North Island and South Island's proposal to merge into a single national grocery entity, citing concerns that the merger would significantly reduce competition in the New Zealand grocery market. Commission chairman John Small stated that the merger would decrease the number of major grocery buyers from three to two, resulting in greater buyer power that could allow the merged entity to negotiate lower prices with suppliers, potentially harming them and leading to reduced consumer choice and quality. Additionally, the merger could hinder investment and innovation in the grocery sector, making it difficult for other retailers to compete. Foodstuffs expressed disappointment with the decision, emphasizing that the merger aimed to enhance operational efficiency and better serve customers. The Commission's ruling underscores the importance of maintaining a competitive grocery landscape in New Zealand. Foodstuffs had previously garnered strong support from its owner-operators for the merger, viewing it as a strategic move for future challenges.