Chris Quin: Foodstuffs North Island CEO on the Commerce Commission blocking proposed North and South Island merger

Foodstuffs has argued a merger blocked by the Commerce Commission would benefit consumers and suppliers. 

The competition watchdog has decided merging the chain's North and South Island co-ops would substantially lessen competition. 

Foodstuffs North Island CEO Chris Quin says they're likely to appeal the decision - based on the evidence they have at this point.

He says the move would only have changed the support each retailer received. 

"Which is out of sight of customers and a part of retail competition - to bring it together in a more efficient way so that we can keep delivering value and innovation for New Zealanders. That's the disappointing thing about today's outcome." 

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Episode Transcript

Speaker 1 (00:00):
And the Commerce Commission has rejected food Stuff's proposal to
merge their North and South Island entities. The report sites
concerns around market competition and the effect on suppliers, reducing
major buyers in New Zealand from three to two. Chris Quinn,
there's food Stuffs North Island CEO and is with a
skelder jack as it stands, Chris, do the North and
South Island food Stuff's arms compete not at all.

Speaker 2 (00:24):
So they are, you know, we are entirely separate from
a geographic point of view. You know, it's one of
the wonders of New Zealand that the North and South
Island geography is quite separated, and we have you know,
the merger proposal was essentially going to see the same
stores and the same communities owned by the same families
and bringing together the support operation for the retail stores,

(00:49):
which is out of sight of customers and part of
retail competition, bring it together in a more efficient way
so that we could keep delivering value on innovation for
New Zealanders. That's the disappointing thing about today's outcome.

Speaker 1 (01:00):
Yeah, what do you think of the ComCom decision? Why
do they make it.

Speaker 2 (01:04):
Look, we're not clear on the why yet. We've got
a press release we've seen today. We have been told
that we will get the full explanation of the decision
by the twenty third of October. You know, we'll do
the right thing, which is to wait for that and
read it through and properly understand it and understand the
points that are in there. But at this point in time,
we don't understand why we have failed to be successful,

(01:28):
which with what is a pretty known legal test for
these events.

Speaker 1 (01:32):
Yeah, I mean, I mean the question is whether or
not going from what the ComCom says as effectively three buyers,
but having those two separate entities become one will mean
that from a suppliers perspective, you as the buyer have
more power or less power than before. And in the
eyes of some going from two to one will mean
you have more more power when negotiating with supplies.

Speaker 2 (01:55):
Right. Yeah, Look, I think the acquisition market argument that
it was mentioned in the press release, and we'll wait
for the detail, but essentially what we have today is
an organization that buys in the North Island and another
organization that buys on the south on it in terms
of the large grocery retailers that sits alongside our competition

(02:16):
war Works Australia, and what we would have after a
merger is two players in the North and the South
Island each. So our view was it doesn't change the
number of channels available to supplies. For one hundred and
two years, we've been really proud to work alongside a
hip Hop and New Zealand Supplies and bring them to
life through one store at a time, or ten stores,

(02:36):
or one region or one of our through retail manners.
So all of those things we think we're part of
the reason why we saw benefit in this for our
supplier partners.

Speaker 1 (02:46):
Is this going to the High Court?

Speaker 2 (02:49):
Well, we're going to wait until we get the determination
document from the Commission. We'll properly read it and consider
it open. But based on what we know today, we
can't see why we've failed the legal test here and
if there isn't anything new from the process we've been
in for the last ten months, we would likely appeal this.

Speaker 1 (03:07):
Thanks Chris, appreciate it. That is Chris Quinn.

Speaker 2 (03:10):
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