The Federal Trade Commission, in an effort to keep supermarket prices competitive in numerous areas of Connecticut, Rhode Island and Massachusetts, has negotiated an agreement with Ahold USA, Inc. and its parent company that would require Ahold to divest a total of 30 supermarkets (or supermarket properties) in 14 communities. The four proposed buyers for the stores would continue to operate them as supermarkets in competition with Ahold’s “Edwards” chain. The agreement would settle FTC charges that Ahold’s acquisition of The Stop & Stop Companies, Inc. would violate antitrust laws by substantially lessening supermarket competition in those areas, possibly resulting in higher prices or reduced quality and selection for consumers.
To ensure speedy divestiture, the proposed settlement names the buyers and would require that the sales be completed within 30 days after the Commission gives the settlement final approval. If the divestitures were not completed on time, the order would permit the FTC to appoint a trustee who, with the FTC’s approval, could divest these 30 supermarkets or, if necessary to ensure timely divestiture, any other combinations of stores in the 14 areas.
The FTC worked closely in its investigation of the acquisition with the Attorneys General of the three states, each of which also is announcing its own settlement agreement today.
“This settlement contains important new safeguards that protect consumers from the higher grocery bills that could result from an anticompetitive supermarket merger,” said William J. Baer, Director of the FTC’s Bureau of Competition. “Not only have we secured the divestiture of a significant number of stores, but the Commission’s order also identifies the buyers up front, so that the stores can be sold soon, rather than months after the deal has gone through. And we include a strong incentive for Ahold to divest in a timely fashion -- because failure to do so would allow the trustee to sell additional stores that Ahold doesn’t want to lose. The result is a settlement that ensures continued vigorous competition and all the consumer benefits that go along with it.”
Ahold, based in Atlanta, Georgia, operates five supermarket chains, including the Edwards chain in the northeastern United States. The Edwards chain consists of 69 supermarkets and is based in Windsor Locks, Connecticut. Ahold is the U.S. subsidiary of Koninklijke Ahold nv, which is based in The Netherlands. Stop & Shop, headquartered in Quincy, Massachusetts, is controlled by SSC Associates, L.P., an affiliate of Kohlberg, Kravis, Roberts & Co., and operates 157 supermarkets in this region of the country.
The settlement would require divestitures in 14 communities, including Hartford, Connecticut, and Providence, Rhode Island. These communities have just under 3 million consumers who pay more than $4 billion for groceries annually. Absent the settlement agreement, Ahold would control as much as 95 percent of the sales by supermarkets in some of the geographic areas at issue. The FTC alleged in its complaint that the deal would eliminate direct competition between Ahold’s and Stop & Shop’s supermarkets, increase the likelihood that Ahold will unilaterally exercise market power, and increase the chances of collusion or coordinated interaction among remaining supermarkets in the areas. The result likely would be higher prices for food, groceries and related services, or reduced quality, selection and service, the FTC charged.
The FTC is seeking public comments on the proposed consent agreement to settle these charges, including comments on the proposed buyers. Of the 30 divestitures, two are future supermarket locations and all except two of the currently operating supermarkets are Edwards stores. The consent agreement would require Ahold to divest:
to Star Markets Company, of Cambridge, Massachusetts, the supermarkets located at:
to Buzzuto’s Inc., a grocery wholesaler based in Cheshire, Connecticut, the Connecticut supermarkets located at:
to Shaw’s Supermarkets, Inc., of Bridgewater, Massachusetts, the supermarkets or lease agreements for premises located at:
and, to Big Y Foods, Inc., of Springfield, Massachusetts, the supermarkets located at:
Ahold also has agreed to maintain the marketability and viability of these supermarkets pending divestiture.
In addition, Ahold will be required for 10 years, to provide the Commission with prior notification of the acquisition of any facility that has operated as a supermarket or any company that operates supermarkets in the areas of the divestitures.
The Commission vote to announce the proposed consent agreement for public comments was 5-0. The agreement will be published in the Federal Register shortly and will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.
NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $10,000.
Copies of the complaint, proposed consent agreement, and an analysis of the agreement to assist the public in commenting are available from the FTC’s Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 202-326-2502. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov
Office of Public Affairs
202-326-2161 or 202-326-2180
(FTC File No. 961 0052)