The Foodstuffs co-ops said the merger would ultimately lead to lower consumer prices.
Foodstuffs North Island (FSNI) and Foodstuffs South Island (FSSI) stand firm in their belief that uniting into one nationwide co-op will help deliver better prices at the checkout and will appeal the Commerce Commission's decision to decline clearance for their merger.
In December 2023, FSNI and FSSI jointly filed an application with the Commerce Commission for clearance to merge into one New Zealand-owned co-op. In October, the Commission announced it was declining to give clearance.
Both co-ops’ Boards have subsequently filed a Notice of Appeal with the High Court stating that the Commission's decision was wrong and that the clearance should have been granted, as the merger would not substantially lessen competition in any market.
Chris Quin, CEO of Foodstuffs North Island and CEO-designate of the proposed nationwide co-op, said the merger was essential to delivering even more competitive customer prices.
“Customers have been asking for better value at the checkout, and we believe this merger is the biggest way we can keep improving to achieve that. By merging our resources, we can make our buying and operations more efficient, which ultimately translates into better prices for New Zealanders,” said Quin.
“There’s been plenty of talk around grocery prices and competition, but smart, efficient business practices - not headlines and red tape - will make our operations leaner and truly deliver better prices at the checkout.”
He added that practical business solutions were needed to achieve lasting change in grocery prices.
Mary Devine, CEO of Foodstuffs South Island, also highlighted the merger's long-term benefits for customers and communities, citing increased efficiency and faster innovation.
“Combining our operations allows us to streamline operations, reduce overheads and better invest in new technology and services that our customers want. This isn’t just a merger - it’s an evolution to ensure we remain competitive and sustainable for the future,” said Devine.
“Our top priority is always to deliver the best value to our customers, and we firmly believe this merger is the most effective way to achieve that. While we had hoped to start passing these benefits to customers immediately, we look forward to becoming a more competitive nationwide co-op once the legal process is complete.”
The Commission was concerned that the merger would remove independent rivalry between the co-operatives in buying groceries from suppliers. However, the co-ops mentioned that they don’t compete when purchasing groceries because they each buy to meet their customer's demands in separate geographic markets.
In general, purchases by one co-op do not affect the quantity purchased by the other, as they are not competing to serve the same customer.
The Commission said it was concerned a merger would reduce suppliers' profit margins, but the co-ops believe the merger would not harm suppliers or competition and would benefit consumers.
The Commission also considered that a merger could increase the likelihood of 'coordination' with Woolworths. However, the merger will not change how the co-ops retail groceries—under multiple national brands with differing strategies and price points and in locally owned and operated stores that serve the needs of their local community.
“We will continue to compete hard against the big Aussie supermarkets. Coordination hasn’t happened in the past; it doesn’t happen now and won’t happen in the future,” said Quin.
“Sitting still is not an option. Both co-ops are committed to evolving and improving, so we remain the first choice of New Zealanders, the best partner for our Kiwi food suppliers, and a resilient local grocery retailer at the heart of communities throughout the country.”
