As I hoped the Court of Appeal case between the Commerce Commission and Woolworths finally started to generate some comment about what was best for consumers rather than shareholders. Currently Woolworths and Foodstuffs own about 99 percent of New Zealand’s grocery market. The Commerce Commission lawyers’ opening evidence was covered on Radio New Zealand this morning:
[T]he Commerce Commission told the Court of Appeal on Tuesday that the High Court gave too much weight to price competition, at the expense of innovation and service.
It says the reduction of non-price components of competition could have as much affect on consumers as a 5% to 10% increase in price.
It also argued that if either acquisition proceeded, it would close off the possibility of an independent third player, such as overseas heavy-weights such as Wal-Mart, from entering New Zealand’s grocery market.
Hmm, not sure WalMart was what I had in mind as a way of breaking the duopoly. Meanwhile NZPA has the Commission’s counsel, James Farmer rejecting the High Court’s finding of fact last year that the Warehouse was unlikely to expand successfully into groceries in a way that would introduce competition to the market:
“It would be ironic that the firm, which has the potential to expand and which is already exerting pressure on the incumbents, should be able to be the subject of acquisition by one or other of those incumbents, thereby subjecting consumers once again to the duopoly,” Dr Farmer said.