Foodstuffs has begun appealing the Commerce Commission’s decision to block the proposed merger of its North Island and South Island businesses.

Foodstuffs North Island (FSNI) and Foodstuffs South Island (FSSI), collectively the appellants, are seeking the court to grant clearance for the merger.

According to BusinessDesk, the appellants listed three main grounds, including the argument that there is no substantial competition between the two businesses.

Given that no competition between the co-operatives would be lost, they said that the merged entity would not have materially greater power in each of their markets.

In addition, the appellants told the court that the risk of tacit coordination with prices in Australian-owned Woolworths was unlikely.

FSNI and FSSI share ownership of several retail brands, namely Pak’nSave, New World, Four Square, and Pams, as well as On the Spot in the South Island. FSNI also owns the wholesale brand Gilmours, while FSSI owns Trents. 

In December 2023, the co-ops jointly filed an application with the Commerce Commission for clearance to merge into one New Zealand-owned entity.

In October 2024, following several extensions of the review process, the Commission decided to block the deal, explaining that the merging parties failed to prove that the merger would not substantially lessen competition, and that the merger would result in a “permanent structural change” to the grocery industry.

“The proposed merger would reduce the number of major buyers of grocery products in New Zealand from three to two, reducing the number of buyers for many suppliers to supply their products to, and creating the largest acquirer of grocery products in New Zealand,” ComCom chair John Small said at the time.

FSNI and FSSI announced in the following month that they would appeal the decision, arguing that combining into a single nationwide co-op would help deliver more affordable prices at checkout.