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Shares of The Warehouse slumped as much as 11 per cent after the antitrust regulator said it plans to appeal the High Court's decision to grant Woolworths and Foodstuffs clearance to bid for New Zealand's biggest discount retailer.
The Commerce Commission has lodged a request for leave to appeal last month's ruling on the grounds that it remained concerned about competition in a supermarket industry where a duopoly exists.
Warehouse shares plunged 70 cents to a 2 1/2-week low of $5.50 at 12.55 pm local time. The stock has dropped six of the past seven trading sessions.
"Appealing the judgment is important given the precedent it sets for the application of competition law in New Zealand, and the implications this has for the long term interests of supermarket consumers," Commerce Commission chair Paula Rebstock said in a statement.
The Commerce Commission in June halted attempts by the Australasian supermarket chains to buy Stephen Tindall's company because it would "substantially reduce competition" in the New Zealand retail market.
Simon Botherway of Brooke Asset Management said he is disappointed by the antitrust regulator's move and"fanciful" views but believes the Commission's chances of succeeding were slim.
The Commerce Commission "is grasping at credibility straws," Mr Botherway told nzherald.co.nz.
"We don't think it's going to be successful. We think the [High Court] judgement was comprehensive and consistent."
Mr Botherway said Brooke Asset wouldn't be selling its Warehouse shares on today's news.
Australia's largest retailer, Woolworths Ltd, said it will oppose the appeal by the Commerce Commission.
"In light of the very clear findings of the Court, Woolworths is surprised and disappointed that the NZCC is seeking to appeal the High Court's judgement and notes that there has been a delay of almost a year since Woolworths sought initial clearance," Woolworths said in a statement to the Australian stock exchange.
"Should the appeal be granted, it would result in further delay, prolonged uncertainty for The Warehouse shareholders and creates significant ambiguity for companies wishing to invest in the New Zealand market."
Foodstuffs managing director Tony Carter said he too will oppose the antitrust regulator's appeal.
"Our submissions to the High Court were robust and we continue to hold the view that The Warehouse does not constitute a competitive threat to Foodstuffs stores," Mr Carter said.
