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Andrew Matthews, Gus Stewart, Jun 30, 2014
Antitrust issues are very much alive in the New Zealand grocery sector, arising in a number of contexts, including: (i) merger approvals, (ii) abuse in relation to demand-side market power, and (iii) fair trading, each of which is discussed below. And given an established supermarket duopoly in New Zealand, we expect continued scrutiny for this sector.
The grocery sector in New Zealand is characterized by two main supermarket chains, one of which is currently being investigated by the New Zealand Commerce Commission in relation to alleged anticompetitive conduct. The two large players in New Zealand are Foodstuffs and Progressive Enterprises. Foodstuffs is NZ-owned, and its main retail brands are “New World,” “PAK’nSAVE,” and “Four Square.” Progressive is ultimately owned by the Australian Woolworths Group, and following the rationalization of its three brands (“Countdown”, “Foodtown,” and “Woolworths”) in 2009 its main retail brand in New Zealand is Countdown.
A few years ago The Warehouse (a large general merchandise retailer) tentatively began expanding its operations into grocery products with its “Extra” stores. However, following failed attempts by both Foodstuffs and Progressive to gain regulatory approval to acquire The Warehouse (as discussed further below), we have not seen the Extra stores having any material impact on the grocery sector.