So, what will they decide? Will they decide? The people at the Commerce Commission have till tomorrow to make or defer a decision on whether either Foodstuffs or Woolworths can bid to take over The Warehouse. The commission has been considering the issue for more than four months and has extended its deadline twice.
There are three potential outcomes this week: The commission says yes. It says no. It further delays a decision.
A "yes" will see both of the supermarket operators separately trying to cut a deal with The Warehouse's founder Stephen Tindall over the 52 per cent of the company he controls. The biggest cheque could win. A "no" will see both Foodstuffs and Woolworths immediately appeal against the decision and the matter will head off to court – which could take months.
A further delay by the commission in making a decision will probably be construed by both Foodstuffs and Woolworths as a bad sign. What another deadline extension might indicate is that the commission has decided it will turn the applications down, but it wants to give itself the extra time to gather its evidence well to fight the inevitable appeal.
This decision is important for consumers, and while the delays may be frustrating in some regards, it is only right that the commission takes the time it needs to reach the right decision. In essence, the commission has to decide if a purchase of The Warehouse by either of the companies will result in increased dominance and less competition in the marketplace.
The Warehouse has begun moves into supermarket retailing. The key question is the extent to which the commission believes that The Warehouse – if left independent – could provide more competition in future in that sector. Legal experts have always been confident the commission will give both supermarket companies the green light.
I'm not so sure. I have had a gut feeling from the outset that the commission might say no. There are recent, very similar, cases in which the commission turned down applications. Last year Infratil subsidiary NZ Bus, which runs Wellington city's bus services, was declined permission to buy suburban bus operator Mana. In 2005 Fletcher Building was turned down when it attempted to buy W Stephenson & Sons. Essentially, both applications were refused because the commission thought that in the hands of another buyer those businesses would compete in the relevant sector. So there are precedents.
Whatever the commission's final decision, both of the supermarket companies will remain determined to snare The Warehouse. Nobody is sure where this will end up, but it certainly won't be dull.
