One of the longer takeover sagas appears to have ended with the warehouse having announced its decision to end the warehouse extra format. This will effectively clear the way for either of the big two supermarkets to take over the warehouse. This is because the commerce commission is of the opinion that the warehouse would be a “maverick”. No-one really agrees on what this means so I won’t try and explain it, but given the ambiguity of the term it’s interesting the commission became so fixated on it.
For those of you who don’t know how competition law works you compare the factual of the merger going through with the counter factual of the merger not happening. With the warehouse extra no longer existing going forward, therefore merger will not eliminate the “third player” from the grocery market and enhance competition in the grocery market will be no different in the factual then in the counter factual.
Two things to look out for concerning this are
- The Commission’s response
They really don’t want this merger to happen
- Whether or not the supermarket that takes over the warehouse rolls out extra in the future.
We discussed on the blog before that we (at least I) think competition would actually be increased if one of the supermarkets is able to roll out the extra format.
Watch this space!