After a battle in the High Court, supermarket giants Foodstuffs and Woolworths are now heading for arbitration over Foodstuffs’ plans for a new development in East Auckland.
Foodstuffs told FMCG Business it’s in it for the long haul – with plans taking shape for PAK’nSAVE Highland Park.
Lindsay Rowles, GM Membership & Property, Foodstuffs North Island says: “Back in 2018 Foodstuffs North Island acquired the Highland Park complex in East Auckland with a bold plan to bring New Zealand’s lowest food prices
with PAK’nSAVE to Highland Park. Aside from the considerable employment opportunities, which will be available for the build and eventual operation of the store – the Foodstuffs North Island team is excited about bringing the next generation PAK’nSAVE store to life.
“A new PAK’nSAVE will substantially increase competition in the area with more customer choice, sharp pricing, great quality, range and service. The PAK’nSAVE brand was voted second only to sister brand New World for customer satisfaction in the recent CANSTAR awards.”
But competition is a funny thing – and the 100% New Zealand owned and operated co-op is facing a lengthy battle with the Aussie operator Woolworths. They are seeking to enforce a restrictive covenant to protect Countdown stores; two of which are literally within a stone’s throw of each other.
“In a nutshell, Woolworths is insisting the restrictive covenant prohibits a supermarket operating on the site next to its Countdown Aviemore Drive supermarket. We own the site and we consider the restrictive covenant is anti-competitive and is not legally enforceable,” says Rowles.
He explains: “Foodstuffs North Island takes its responsibility to act lawfully very seriously, so we started a proceeding in the High Court to ask the court to determine whether Woolworths’ restrictive covenant is or is not enforceable to prevent PAK’nSAVE operating from the site.
“Foodstuffs North Island went to the High Court because we want the matter to be determined in public and we want to set a legal precedent allowing for more competition at Highland Park. We are proud of our policy of bringing New Zealand’s lowest food prices to the community through our PAK’nSAVE brand and we believe the public has a right to know about the benefits of increased competition.
“However, Woolworths asked the Court to refer the dispute to a private arbitration between the parties, relying on an arbitration clause in the Woolworths Aviemore Drive store lease. The lease was drafted by Woolworths when they owned the centre and Foodstuffs North Island simply inherited it when it purchased the land.
“The dispute over Woolworths’ restrictive covenant will now need to be determined in a private arbitration setting, rather than in public in the Court. The outcome will be private due to privacy provisions under the Arbitration Act, and the decision on Woolworths’ restrictive covenant and whether it is enforceable will not be able to be relied upon if we want to introduce more competition elsewhere.
“We’re disappointed to be heading to arbitration as we wanted the case determined in public in the Court. But, we are happy to take on the battle to ensure customers benefit from substantially increased and vigorous competition, better prices, more choice and a brand new PAK’nSAVE,” says Rowles.
A Countdown spokesperson told FMCG Business: “We have been a proud part of the Highland Park community since the 1970’s. When Foodstuffs became our landlord, they would have been aware of the requirements in the lease, which ensures that our Countdown supermarket remains part of an integrated and functioning shopping centre here, and the lease also includes other requirements around pedestrian and vehicle access. Foodstuffs has taken legal action against us. All that’s been decided so far is that the issue should be decided by arbitration as required by the lease, rather than in a court.”