Woolworths withdraws Warehouse appeal, but still contemplating offer

Posted by James Ferre on 17th October 2008

Woolworths Limited, Australia’s largest supermarket operator, yesterday withdrew its application to the Supreme Court for leave to appeal a judgement by the New
Zealand Court of Appeal that prevented them from taking over NZ retailer The Warehouse.

That judgment confirmed the decision of the Commerce Commission declining clearance to Woolworths acquiring 100% of the shares in, or assets of, The Warehouse Group.

The decision does not mean Woolworths has given up on purchasing The Warehouse, however, as it appears likely that they will instead re-apply for permission from the Commerce Commission – the competition watchdog in New Zealand.

The Warehouse recently cancelled the roll-out of their ‘Extra’ stores, which were one of the key reasons for the Commerce Commission blocking Woolworths from any acquisition. The strength of the Extra outlets, which sold food as well as general merchandise, as a competitor to the two established supermarket leaders, Woolworths and Foodstuffs, was a contentious issue in the recent court case and the Commerce Commission has advised that, in light of recent events, Woolworths should cancel their appeal and re-apply with the Commission.

“The appropriate course, where there are truly new and relevant market facts, is for Woolworths to re-apply for clearance so that the commission can consider the material that was not available to it at the time of the original clearance application,” the Commission advised.

Woolworths is remaining coy about the situation, issuing a statement suggesting they were continuing to monitor the situation of The Warehouse and the outlook for retail in New Zealand.