By SIMON HENDERY retail writer
Britain's Privy Council spent less than half an hour deliberating yesterday morning (NZ time) before overturning a Court of Appeal decision which has thwarted, until now, a possible merger between this country's second and third-largest supermarket groups.
The bid by Perth-based retailer Foodland Associated to add
the Woolworths group to its Progressive supermarket stable was stymied last September by a Court of Appeal decision overturning initial clearance for the merger granted by the Commerce Commission.
Foodland's interest in buying Woolworths - first lodged with the commission in May last year - sparked a challenge from the country's largest supermarket operator, Foodstuffs.
Foodstuffs is a collective of three independently owned co-operatives which run the Pak 'N Save, New World, Write Price and Four Square brands, and have a combined market share of about 55 per cent.
Progressive owns the Foodtown, Countdown and 3 Guys chains, while its target, the 83-store Woolworths group, includes Woolworths, Big Fresh and Price Chopper.
Foodland first applied to the Commerce Commission for clearance to acquire Woolworths in May last year, just a day before the introduction of tougher competition laws.
The commission's clearance of the takeover was overturned by the Court of Appeal following legal action by Foodstuffs.
After assessing Foodland's second bid under the stricter criteria, the commission declined its application last December.
Yesterday's Privy Council decision - which came at the end of a one-day hearing - found the Court of Appeal had not acted correctly in overturning the commission's original ruling. A written judgment, following yesterday's oral ruling from the Law Lords, is expected within a few weeks.
Foodstuffs (Auckland) managing director Tony Carter said from London yesterday that the decision was surprising and disappointing, but the company would have to accept it.
"We believed strongly that a combined Progressive-Woolworths operation should have been considered under the new Commerce Act provisions."
Foodland group managing director Trevor Coates said a merger of Woolworths and Progressive would benefit consumers by providing a stronger competitor to Foodstuffs.
Foodland shares reached an all-time high on the Australian Stock Exchange yesterday after news of the ruling.
