Woolworths ruling shows legal flaws

By Nick Smith

Friday 3rd May 2002

Ted van Arkyl

New Zealand business needs the Privy Council, with the Woolworths decision demonstrating flaws in the legal system, a supermarket owner says.

The council took less than half an hour to overturn a Court of Appeal decision blocking Progressive Enterprises owner Foodland Associates buying Woolworths.

Progressive managing director Ted van Arkyl said the speed of the decision showed the entire legal process his company had endured was "absolute nonsense."

"The business community will be heartened by the decision that came out of the Privy Council and hopefully that will add to the debate," he said.

The government plans to abolish the Privy Council in 2004 and replace it with a Supreme Court.

Meanwhile, Foodland group managing director Trevor Coates said he was meeting Woolworths owner Dairy Farm International next week.

Although Dairy Farm has said its subsidiary Woolworths is not on the market, Mr Coates said he had contacted the chief executive and arranged the meeting.

It is understood senior executives yesterday visited Woolworths stores and a decision is expected within days of next week's meeting.

Australian-based Foodland has seen its share price rise to $A18.32 on the back of speculation it will soon buy Woolworths, with analysts picking it will top $20 if the deal goes through.

Progressive, which owns the Countdown, Foodtown and 3 Guys chains, would hold about 45% of the grocery market if it buys Woolworths.

Its competitor Foodstuffs owns 55% of the market and a spokesman said the company was disappointed but accepted the Privy Council decision.

Foodstuffs took the Commerce Commission to the High Court, arguing it should have used the tougher test of substantially lessening competition when assessing Progressive's bid. It lost but successfully challenged the decision in the Court of Appeal. However, the Privy Council found the Court of Appeal had acted incorrectly in overturning the commission's original ruling.

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