Supermarket chain Foodstuffs claims rival Woolworths is using "anti-competitive" tactics to block it from opening a supermarket on the land it owns.
But ASX-listed Woolworths, which operates Countdown supermarkets in New Zealand, disagrees. It says Foodstuffs was aware of requirements in its lease agreement that ensures its supermarket remains part of Highland Park shopping centre.
Foodstuffs bought Highland Park shopping centre in East Auckland in December 2017 and took possession of the site in June 2018.
Foodstuffs planned to open a Pak'nSave supermarket on the property and redevelop the site, however, the Auckland-based supermarket operator says Woolworths is blocking progress due to a clause in the lease that restricts trade.
The lease also states disputes should be resolved through arbitration.
Lindsay Rowles, Foodstuffs' North Island general manager of membership and property, said the company believes the trade restriction clause "isn't legal" and is "not enforceable".
"When Foodstuffs purchased the site there was an existing lease in place for the store trading there at the moment. In that lease, there is a covenant that in our view restricts trade and we're asking for that to be removed because we believe it is anti-competitive," Rowles told the Herald.
"We weren't their landlord at the time. When they wrote the lease they agreed themselves that this clause would be required by them to protect their retail trade in this asset."
But Rowles said development and opening a Pak'nSave on the site would not stop Woolworths' Countdown store, which has been operating since the 1970s, from trading.
"The development of a Pak'nSave on the site next door does not restrict the Woolworths store from trading; as it does today. In fact, our hope is it brings more customers to the area and improves the quality of carparking amenity within that shopping centre."
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The shopping centre had not received significant investment for at least 20 years, he said.
Foodstuffs filed legal proceedings in the High Court to lift the restraint of trade in July. The case will be settled through arbitration. A date has yet to be scheduled.
A Countdown spokeswoman said the issue was complicated.
"When Foodstuffs became our landlord, they would have been aware of the requirements in the lease which ensures that our Countdown supermarket remains part of an integrated and functioning shopping centre here, and the lease also includes other requirements around pedestrian and vehicle access.
"While we disagree with the comments from Foodstuffs, we don't feel like it's the right thing to do to have a discussion about this via the media," she said.
"We really value our customers in the Highland Park community, and want to continue to serve them as best we can."
Rowles said Foodstuffs and Woolworths had been in this situation before. Development of the company's Wairau Park Pak'nSave store in Auckland's North Shore was delayed for more than 10 years due to competitive action, he said.
"We've got a long-term view that we will trade as Pak'nSave at some point; the question is how many delays will Woolworths put in the way."
Highland Park shopping centre had a small Countdown on it when Foodstuffs purchased the property, there was also another Countdown store on a property next door.
"The design we have put forward allows their existing store on the site we own to trade, and it allows for a Pak'nSave to trade beside it," Rowles said. "We believe the design respects their lease and it allows both parties to trade in competition.
"We were aware Woolworths had a lease on the site when we bought it and that's why we so carefully planned our development proposal so they could trade all the way through unencumbered."