Progressive makes new thrust for Woolworths

It is the second time Progressive has sought clearance. It was given Commerce Commission approval to buy the chain in July but this was withdrawn following court action by rival supermarket operator, Foodstuffs.

Progressive is currently pursuing an appeal to the Privy Council to overturn the ruling and says the new application will be pursued pending the appeal.

Progressive, which is owned by Perth-based Foodland (NZSE: FAL), says the new application will be reviewed against New Zealand's recently tightened competition law as contained in recent amendments to the Commerce Act. A decision is expected before Christmas.

The company's MD, Ted van Arkel, says the recent decision to exclude the company's original clearance from the ten others ratified by the Commerce (Clearance Validation) Amendment Bill has delayed the creation of a more competitive New Zealand supermarket industry.

"The industry is currently dominated by the three Foodstuffs co-operatives which have a combined market share of 55% compared to Progressive's share of 21% and Woolworths New Zealand's share of 19%.

"Our vision is for a combined Progressive Woolworths business which will have the strength needed to compete with Foodstuffs on an equal footing. To this end we are following the government's recommendation that we go back to the Commerce Commission".

Mr van Arkel is expecting further challenges from Foodstuffs, which has so far blocked the purchase.

"We expect that Foodstuffs will use all legal and political tactics at their disposal to oppose our application and frustrate the clearance process. They will do this for no other reason than it is in their own best commercial interests to preserve the market power they hold because of their dominant market share, which is unparalleled in any other western marketplace in the world."

Progressive, which owns the Foodland, 3 Guys and Countdown franchises in New Zealand, claims a merger with Woolworths will bring lower prices to consumers. Woolworths is owned by Hong Kong-based Dairy Farm.

Under previous Commerce Commission rules Progressive's bid was judged on whether the acquisition would "result in dominance being acquired or strengthened in any market" but under new rules the bid will be checked to see if a purchase would "substantially lessen competition" in the NZ supermarket sector.

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