KEY POINTS:
It is time for the Commerce Commission to cut its losses and let market forces run their course on the future of The Warehouse.
It is almost a year since Woolworths and Foodstuffs applied to the commission for permission to buy the retail giant.
At that time a lucrative bidding war was shaping up for The Warehouse's 10,000 shareholders. Expectations were it would extract a price north of $7 a share.
Most in the market believed Woolworths had the edge but an intriguing partnership appeared to be emerging between Foodstuffs and Australian private equity player PEP.
The commission took a painful six months to reach its conclusion - presumably because it wanted to make a strong case which was difficult to appeal.
But in the end it wasn't difficult.
After a two-week court case which began in October, it has taken Justice Jill Mallon less than a month to determine that the commission got it wrong.
Mallon has surprised everyone with the speed of her decision, which was made with assistance from Professor Stephen King, a commissioner on the Australian Competition and Consumer Commission.
Despite the fact that most serious pundits were picking the win for the supermarkets, the market has been caught well and truly off guard, with the shares surging almost 25 per cent yesterday.
Many investors had expected the decision later next month, if not in the new year.
While the spike suggests a belief that the bidding war is about to begin, there is still another potential hurdle.
The commission has 20 days to decide whether to take the case to the Court of Appeal. It will argue it has the best interest of consumers at heart. But others will argue it is simply wasting time fighting for a fantasy world where three giant supermarket players squeeze prices down.
That was a compelling vision until The Warehouse joined Foodstuffs and Woolworths in their appeal.
It must have been extremely difficult to argue that The Warehouse could one day be a serious third supermarket player when the company itself was standing in court saying it wasn't actually interested in going down that route.
That now looks like a scenario that won't eventuate regardless of who owns the Red Sheds. It's time to let the bidding begin.
