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Shares in the Warehouse dropped 61 cents to $3.21 this morning following the Court of Appeal reversing a High Court decision to allow the sale of the Warehouse to either Foodstuffs or Woolworths.
A loss for shareholders was nevertheless hailed as a gain for consumers by the Commerce Commission, and a victory for competition in markets.
ComCom chair Paula Rebstock says, “New Zealand consumers know that more competition is needed in the supermarket sector. In coming to its decision to decline the acquisition the Commission considered that The Warehouse had already brought important new dimensions to supermarket competition, and potential competition, through its innovative supercentre stores."
The Commission declined clearance in mid-2007 for acquisition by either Foodstuffs or Woolworths, arguing New Zealand’s supermarket retail market is already highly concentrated. “There are high barriers to entry in the industry, yet The Warehouse is uniquely placed to compete with the supermarkets because of its existing property portfolio, extensive distribution networks and established brand” according to a statement the Commission released today.
The Commission is studying the judgment and won’t comment further until the full reasons for the judgment are released publicly by the Court of Appeal.