Only this year, John Fingleton, chief executive of the OFT, said the independent sector needed to increase efficiency before the issue of unfair competition in the grocery market could be addressed.
Neil Turton, chief operating officer at Nisa-Today's, acknowledges that a merger with Costcutter would have been a golden opportunity to do that. Now it has been squandered, the message from critics is that independents are their own worst enemy. "They're absolutely right. The opponents of change are now the heroes and the opponents of the status quo are the villains," says Turton.
Jerry Marwood, MD of Spar, which announced a buying alliance with the Co-operative Group in August, says he thinks ventures such as that pursued by Nisa-Today's are vital. "I think some kind of merger upstream is inevitable and a good thing for buying groups in the independent sector. I have a lot of sympathy for what Nisa-Today's and Costcutter were trying to achieve. But you have got to be selective about what you merge and you can't lose your independence at the front end."
The merger was derailed because of a complaint made to the OFT from within Nisa-Today's about alleged cartel activity. This alleged that Costcutter retailers were being discouraged from leaving Costcutter to directly join Nisa-Today's. The banks offering funding for the deal consequently introduced "unacceptable" conditions allowing for the cost of the OFT's preliminary deliberations and a possible fine if any case went against Nisa-Today's.
One perspective is that it could all have been avoided had Nisa-Today's communicated better with retailers. One commentator on the wholesale sector says: "There has obviously been a huge gap between the hierarchy and retailers in the field. One major mistake the board made was announcing the merger without discussing it with retailers. Had that been done, it could have taken them with it. Nisa-Today's could have called a conference of retailers without breaking confidentialities."
However, Turton says: "I was getting letters from solicitors because I was replying to retailers on our internet bulletin board. It was a case of you're damned if you do and damned if you don't."
Given that consolidation in the independent sector is the most obvious way of combating the supermarkets, closer co-operation is still on the cards. MD Colin Graves says: "Costcutter will continue to work with Nisa-Today's as a valuable business partner in developing central distribution."
And Kaupthing, the bank offering much of the merger funding, says: "We believe in this merger and look forward to working with the new Nisa/Costcutter team to create a pillar of support for independents and a more efficient, financially stronger organisation, capable of withstanding the threat of the major multiples."
Further negotiations will be delayed, however, until after the OFT announces whether it intends to pursue the complaint. It hopes to make a decision by Christmas, but there is no rush on the part of Nisa-Today's to go back into the fray. Turton says: "We think members deserve a good Christmas. They had a crap one last year because of distribution at Scunthorpe. So I think we need to get Christmas out of the way before we ask where Nisa-Today's is going next." He suggests this setback may permanently scupper a merger. "I still believe a combination of the two companies is the right way forward, but I don't know that a merger could be reconstructed in the same way."
So what about tying up with someone else? Dudley Ramsden, Nisa-Today's executive chairman and a key proponent of the merger with Costcutter, has consistently sought further consolidation. However, overtures made to Landmark and Londis in the past were ultimately unfruitful.
Meantime, Nisa-Today's is facing increasing competition from the major supermarkets. The loss of Jacksons and Bells Stores to Sainsbury's substantially weakened Nisa-Today's buying clout and one reason for the merger was originally to defend Nisa-Today's against future losses.
But if a merger is immediately impossible, one variation on that theme could be a buying alliance, similar to that forged between the Co-operative Group and Spar in August. Turton says: "I think alliances are the way to do it, without going down the line of selling the company. We will be picking up the phone and seeking alliances with others. We have a lot of capacity. That's costing a lot and we need more volume in order to cope." Other candidates for alliances could be one of the larger independent wholesalers, such as P&H McLane or Booker.
Then there's the prospect of being bought out. Approaches by the Co-operative Group in 2004 foundered, but Bestway made an offer for Nisa-Today's shortly after proposals to merge with Costcutter were announced. MD Younus Sheikh says: "We haven't had a chance to review the situation, but we have the resources and the interest is still there."
However, he said there had been no direct communication between the board of Nisa-Today's and Bestway's board since its original approach was frozen while the situation with Costcutter progressed.
Whatever happens to the company in the long term, the internal rifts that have emerged need to be addressed. There have been harsh words about major personalities in Nisa-Today's. And ultimately, it was prominent retailers within the group that steered the Nisa Members' Assocation to scupper the merger.
That said, a significant portion of the NMA distanced itself from the organisation's actions as merger talks progressed. Turton says: "In the circumstances I am trying to call for unity. I don't like to criticise the NMA because ultimately it is composed of Nisa-Today's members."
Some retail members have raised the prospect of a vote of no confidence in at least some of the board because of how merger negotiations were handled. Could a board restructure be on the cards?
Already Ramsden's place as executive chairman is being questioned. According to reports close to the board, a group of non-executives is compiling a report outlining options for the future board, including Ramsden's replacement. It will be presented at a meeting next week.
Turton says: "There are views on management accountability. None of these have led to anything formal." However, he adds: "The debate about modernisation is in the minds of many members."
Celebrating its victory, a statement from the NMA reads: "The NMA will meet with the board and will be proposing new governance arrangements for the company."
One wholesale industry insider says: "I think you'll see some board changes. They need more retailer presence on the board and I think they'll appoint an MD."
Whatever happens, the organisation faces a lot of soul searching. Nisa-Today's will be hoping it will ultimately strengthen the group.