Ruling Very Serious For NZ Business
September 19, 2001
Today’s majority decision by the Court of Appeal that the Commerce Commission was not able to apply the old test in approving Progressive Enterprises’ application to acquire Woolworths New Zealand Ltd will play havoc with $3 billion worth of business transactions, said Progressive’s Managing Director Ted van Arkel.
The decision overturns the earlier judgment by a Full Court of the High Court.
“Not only does it affect our proposed acquisition, but also 10 other transactions where applications for clearance were in place before the Commerce Amendment Act 2001 came into effect on May 29.”
Mr van Arkel said the Commerce Commission’s advice was that the law in place on May 26 would apply to all applications made by that date. “We also understand this was the Government’s intent, and that was what the High Court had ruled.
“We want to continue with this transaction and will now be seeking an urgent legislative solution to confirm the ability of the Commerce Commission to apply the old test through the transition period.”
Mr van Arkel said Progressive and other businesses affected by the ruling had already spoken to the Government. What was required immediately for business certainty was a signal from Government that such legislation would be introduced without delay.
“It is New Zealand’s supermarket shoppers who will benefit if we succeed with this proposed acquisition as we will be able to increase our buying power and operating efficiencies and thereby lower prices. That will mean real price competition for Foodstuffs.”
“Foodstuffs have predictably wanted to maintain their dominance in food retailing by obstructing the prospect of increased competition, which is why they have challenged our Commerce Commission clearance both in the High Court and the Court of Appeal.”
The proposed acquisition would mean a combined market share of 40 percent for Progressive/Woolworths against Foodstuffs’ 55 percent. Progressive currently has 21 percent of supermarket sales and Woolworths 19 percent.