For Your Information : November 26, 1996
The Federal Trade Commission today announced the following actions.
Petitions to reopen and modify or set aside orders: The FTC has received a petition from the following entity seeking changes in an FTC order. Before the Commission rules, the petition is subject to public comment for 30 days, until Dec. 26.
- Schwegmann Giant Super Markets, Inc., of New Orleans, Louisiana, has petitioned the FTC to reopen and modify a 1995 consent order so as to replace a provision requiring Schwegmann to obtain prior Commission approval for certain transactions, with a prior notice provision. The provision at issue applies to any acquisitions of retail grocery stores in the New Orleans metro area that Schwegmann makes through June 6, 2005. (See March 8, 1995 news release for more details regarding the consent order; Docket No. C-3584.) Staff contact is Daniel Ducore, 202-326-2526.
Commission action regarding applications for prior approval: Following a public comment period, the FTC has ruled on an application from the following:
- The FTC has approved the application of Koninklijke Ahold NV, of The Netherlands, and Ahold USA, Inc., based in Atlanta, Georgia, to divest four Edwards supermarkets in Connecticut to Bozzuto’s, Inc., a wholesaler and supermarket operator based in Cheshire, Connecticut. The stores to be divested are located at 207 Hartford Turnpike in Vernon; Newbrite Plaza, 60 East Main Street in New Britain; 333 North Main Street in West Hartford; and 750 Queen Street in Southington. Bozzuto’s will re-divest the Southington store to Shaw’s Supermarkets, Inc. Divestiture of these and 24 other stores is required under a July 1996 consent order designed to restore supermarket competition that allegedly was injured in 14 communities in Connecticut, Rhode Island and Massachusetts following Ahold’s acquisition of The Stop & Shop Companies, Inc. (See July 15, 1996 news release for more details regarding the consent order; Docket No. C-3687; Commission vote to approve the divestitures was 5-0, although Commissioner Mary L. Azcuenaga dissented as to the Southington store. In her dissenting statement, Commissioner Azcuenaga said that a letter from Big Y Foods, Inc. received during the public comment period informed the Commission that Bozzuto’s had agreed to resell the store in Southington, Connecticut, to Shaw’s. "The Commission has not ascertained whether Bozzuto’s is acting as a strawman for Shaw’s, and, if so, why Bozzuto’s is acquiring the store only to resell it to Shaw’s, nor has the Commission explored the competitive implications of the substitution, " Azcuenaga said, adding: "If this divestiture is so completely inconsequential that the Commission is unwilling to take the time to answer even the fundamental questions or to unravel the ensuing competitive implications of the substitution, then why force Ahold to divest the Southington store in the first place?" A statement issued by Chairman Robert Pitofsky and Commissioners Janet D. Steiger, Roscoe B. Starek, III, and Christine A. Varney states: "We are satisfied that the staff carefully investigated the competitive effect of the Southington store’s purchase by Shaw’s, and that the Commission has a sufficient basis to conclude that Shaw’s was a preferable purchaser from a competitive point of view . . .." In a reply statement, Azcuenaga observed: "Nothing in the statement of the majority resolves any of three concerns: (1) the issue raised by Big Y would not have come to the attention of the Commission but for the comment filed by Big Y; (2) the issued raised by Big Y apparently would not have been addressed but for my dissent; and (3) things that are written down after the vote are not helpful in deciding how to vote . . .." She added: "The Commission approved divestiture to Bozzuto’s [not Shaw’s], and the assertion that Shaw’s [not Buzzuto’s] was the ?preferable purchaser . . . to other potential purchasers’ is confusing at best and may be inconsistent with the Commission decision to approve a purchase to Bozzuto’s." Azcuenaga concluded: "[M]y objection to the approval of the Southington divestiture is that given the available information, it was not possible for the Commission even minimally to analyze the competitive implications of a divestiture to Shaw’s. No amount of post-vote explanation can change that.") The FTC staff contact is Roberta Baruch, 202-326-2861.
Consent orders given final approval: Following a public comment period, the Commission has determined to issue consent orders with the following entities as final, thus making the consent order provisions binding on the respondents:
- with Hale Products, Inc., of Conshohocken, Pennsylvania, and Waterous Company, Inc., of South Saint Paul, Minnesota, settling charges that these two leading manufac turers of fire truck-mounted fire pumps each imposed restraints requiring their customers to deal exclusively in that manufacturer’s pumps. This reduced competition between the two firms and made it more difficult for other firms to enter the market for truck-mounted fire pumps, the FTC alleged. The consent orders prohibit the respondents from entering into, continuing, or enforcing any requirement that fire truck manufacturers refrain from purchasing mid-ship mounted fire pumps from any company, or that any purchaser sell only the relevant respondent’s pumps. In addition, each of the two companies is required to send a specifically-worded notice to fire truck manufacturers stating that it has entered into an agreement with the FTC under which the respondent will not refuse to sell mid- ship mounted fire pumps because a manufacturer refuses to sell the respondent’s pumps exclusively, and also that manufacturers are free to offer and install competing pumps. (See July 24, 1996 news release for more details regarding this case; Docket Nos. C-3693 [Waterous], and C-3694 [Hale]; Commission votes on Nov. 25 to finalize the orders were 3-2, with Commissioners Mary L. Azcuenaga and Roscoe B. Starek, III, dissenting and issuing statements, and the majority also issuing a statement.
"I cannot endorse an ineffective remedy for a nonexistent harm," Starek said in his dissenting statement, which also outlines his reasons for concluding that (1) the distribution policies of Hale and Waterous cannot be characterized as "exclusive," because several large fire truck manufacturers said they would be willing to install (and in fact have installed) another pump manufacturer’s pumps at their customer’s request; (2) the policies in any case did not harm competition (in part because they did not entail the allocation of final customers, that is, the fire departments, and in part because the evidence does not show that they deterred entry); and (3) the prohibitions on requiring exclusivity as a condition of sale do not remedy the alleged anticompetitive effects because the respondents could pursue a variety of alternative strategies to achieve the same end.
Azcuenaga commented that she generally endorsed Starek’s views, adding: "The evidence does not in my view suggest a market in which competition has been unlawfully restrained . . .."
Chairman Robert Pitofsky and Commissioners Janet D. Steiger and Christine A. Varney disagreed with Starek’s suggestion that the allocation of customers for a component would be undermined by, among other things, competition for customers of the final product. That would be true, the majority said, in situations where the component is a significant part of the cost of the final good or where the final customers have a stronger preference for the component than the ultimate good, but neither was the case here. The majority added: "The fact that the exclusive policy was not perfect . . . did not have a significant effect on competition at the pump level." The plan worked for several decades to diminish competition, keep prices higher and make new entry more difficult, they said, concluding that "those are the anticompetitive effects that the Commission’s orders are intended to address.") FTC staff contact is William J. Baer, 202-326-2932, or Mark Whitener, 202-326-2845.
Copies of the documents referenced above are available on the Internet at the FTC’s World Wide Web site at: http://www.ftc.gov (no period). FTC news Releases and other documents also 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 1-866-653-4261. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
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