Order Would Remedy Anticompetitive Effects of Firm's Acquisition of Supermarkets, Assets
Through a consent agreement reached with the Federal Trade Commission and announced today, Winn-Dixie Stores, Inc. ("Winn-Dixie") would be allowed to acquire 68 supermarkets and other assets from the bankrupt Jitney-Jungle Stores of America, Inc. ("Jitney-Jungle"), in a manner that will not illegally reduce competition in the relevant geographic markets, following an auction held under the auspices of the bankruptcy court. Jitney-Jungle filed for Chapter 11 bankruptcy protection on October 12, 1999, closing more than 45 of its 200 "Jitney-Jungle" and "Delchamps" supermarkets in Mississippi, Louisiana, Florida, Arkansas and Tennessee. It originally proposed selling 72 of the remaining supermarkets to Winn-Dixie for $85 million. The sales plan approved confirmed by the U.S. Bankruptcy Court for the Eastern District of Louisiana on December 15, 2000 is reflected in the FTC's proposed consent order.
"This order will remedy the Commission's competitive concerns about the proposed acquisition by ensuring that Winn-Dixie meets very specific purchasing and compliance requirements before buying supermarkets or sites in the relevant geographic markets," said FTC Bureau of Competition Director Richard G. Parker. He said this is the first time the FTC has reached an agreement with a supermarket chain concerning the sale of its assets after it had already filed for Chapter 11 protection.
A Florida corporation with its headquarters in Jacksonville, Winn-Dixie operates more than 1,000 supermarkets in 14 southeastern states and the Bahamas. It reported sales of more than $14.1 billion in fiscal 1999.
According to the Commission's complaint, Winn-Dixie's proposed acquisition of various supermarket assets of Jitney-Jungle would violate Section 7 of the Clayton Act and Section 5 of the FTC Act by substantially lessening competition in several markets through the elimination of direct competition between supermarkets currently owned or operated by Jitney-Jungle and those owned or operated by Winn-Dixie. In addition, the FTC contends that the purchase would lead to an increased likelihood that Winn-Dixie will unilaterally exercise market power and to a greater probability of collusion or coordinated interaction among the remaining supermarket firms in these areas. Each of these effects increases the chances that the price of food, groceries or services will go up, and that the selection of these items will decrease, in the relevant geographic markets.
The complaint alleges that these anticompetitive effects are likely to occur in and around the following areas: Niceville, Gulf Breeze and Destin, Florida; and the Gulfport-Biloxi area of Mississippi, which consists of parts of Hancock, Harrison and Jackson counties that include Waveland, Bay Saint Louis, Pass Christian, Long Beach, Gulfport, Biloxi, D'Iberville, and Ocean Springs, along with narrower markets in that area. In each of these markets, Jitney-Jungle and Winn-Dixie are direct and actual competitors, and the Commission contends that the purchases as originally proposed would eliminate that competition. Each of the post-merger markets would be highly concentrated, according to the Commission, with the two firms controlling market shares of between 34 and 100 percent in the relevant geographic areas. Further, entry by a competing supermarket chain would be difficult and neither timely, likely nor sufficient to alleviate the adverse effects on competition.
For 10 years after it becomes final the proposed order would bar Winn-Dixie from acquiring any interest in four specified Jitney-Jungle supermarkets without obtaining prior FTC approval. In addition, for 10 years Winn-Dixie would be required to provide written notice to the Commission before acquiring any interest in a supermarket owner or operator, or any facility that has operated as a supermarket within the previous six months in the relevant geographic markets. After such notice is provided, the company would be barred from completing the acquisition until it gave the Commission any information requested during the specified waiting period. This provision would not restrict Winn-Dixie from building new supermarkets of its own, however, nor would it restrict the company from leasing facilities that have not been operated as supermarkets within the previous six months.
In addition, for 10 years Winn-Dixie would be prohibited from entering into or enforcing any agreement that restricts the ability of any person that acquires any supermarket, leasehold interest in a supermarket, or interest in any retail location used as a supermarket in certain designated areas on or after January 1, 2000 to operate a supermarket at that site if the supermarket was formerly owned or operated by Winn-Dixie. These areas include: Okaloosa, Santa Rosa and Walton counties in Florida; Hancock, Harrison, Jackson and Lauderdale counties in Mississippi; St. Tammany Parish in Louisiana; and Mobile County in Alabama. Further, Winn-Dixie would be barred from removing fixtures or equipment from a store or property owned or leased in these counties that is no longer in operation as a supermarket, except:
1) before a sale, sublease, assignment or change in occupancy; 2) to relocate such fixtures or equipment in the ordinary course of business to another Winn-Dixie supermarket; or 3) with the prior approval of the Commission.
Finally, Winn-Dixie would be required to provide the FTC with a report detailing its compliance with the consent order beginning one year from the date the order becomes final, and each year for the following nine years.
The Commission vote to accept the consent order and place a copy on the public record was 5-0. The order will be subject to public comment for 30 days, until February 8, 2001, after which the Commission will decide whether to make it final. Comments should be sent to: FTC, Office of the Secretary, 600 Pennsylvania Ave., N.W., Washington, D.C. 20580.
Copies of the complaint and consent order are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
Mitchell J. Katz,
Office of Public Affairs
Richard G. Parker,
Director, Bureau of Competition
James A. Fishkin,
Bureau of Competition
Michael J. Bloom,Senior Counsel
FTC Northeast Regional Office
(FTC File No. 011-0022, Winn-Dixie/Jitney-Jungle)
(Case No. 99-17191)