The Federal Trade Commission today announced a proposed settlement agreement with The Kroger Co. and The John C. Groub Company, Inc. The agreement would resolve FTC charges that the proposed acquisition of Groub by Kroger would substantially lessen supermarket competition in Indiana and could result in higher prices or reduced quality and selection for consumers. The proposed agreement would require Kroger and Groub to divest three supermarkets in Columbus and Madison, Indiana, to Roundy's, Inc. Roundy's is one of the largest food wholesalers in the United States and an operator of company-owned supermarkets.
"Consumers in Indiana can now be assured that they will continue to receive the benefits of competition - lower prices and good quality and selection - from supermarkets in their communities," said William J. Baer, Director of the FTC's Bureau of Competition.
Kroger, the largest supermarket firm in the United States, is based in Cincinnati, Ohio, and operates more than 2,200 supermarkets and convenience stores in 37 states. Kroger operates 89 supermarkets in Indiana.
Groub, an Indiana corporation headquartered in Seymour, Indiana, operates 30 retail supermarkets in southern and central Indiana under the trade names "Jay C," "Foods Plus," and "Ruler."
According to the FTC, two Kroger supermarkets directly compete with four Groub stores in Columbus and Madison, Indiana. In these markets, the FTC charged, the acquisition would increase concentration, and, as a result, decrease competition. Entry into these markets would be difficult and unlikely to prevent anticompetitive effects, the agency said. The proposed acquisition, the agency charged, could result in price increases, and decreases in the quality and selection of food, groceries or services.
The proposed settlement would resolve the FTC's antitrust concerns. Kroger and Groub would have to divest three supermarkets in the two markets: one Groub "Jay C" store and one Groub "Foods Plus" store in Columbus, Indiana, and one "Kroger" store in Madison, Indiana, to Roundy's.
The specific supermarkets that Kroger and Groub would have to divest to Roundy's are:
"Jay C," 2540 Eastbrook Plaza, Columbus, Indiana 47201 (Bartholomew County);
"Foods Plus," 1343 North National Road, Columbus, Indiana 47201 (Bartholomew County);
"Kroger," 748 Jefferson Court, Madison, Indiana 47250 (Jefferson County).
Under the terms of the proposed consent order, Kroger and Groub would have to divest the supermarkets no later than 20 days after Kroger acquires substantially all of the assets of Groub or four months after the proposed consent order is signed, whichever is earlier. The proposed order also would require that either Kroger or Groub immediately rescind any divestiture that the Commission finds unacceptable at the time the agency decides to make the proposed order final.
Kroger and Groub also would have to maintain the marketability and viability of these supermarkets pending divestiture.
For a period of 10 years from the date the proposed consent order becomes final, Kroger would be required to provide notice to the Commission prior to acquiring any supermarket assets in Bartholomew or Jefferson counties, Indiana. For a period of 10 years, the order also would prohibit Kroger from entering into or enforcing any agreement, in those same counties, that restricts the ability of anyone that acquires an interest in a supermarket to operate a supermarket at that site if such supermarket was formerly owned or operated by Kroger. In addition, the order restricts Kroger's ability to remove fixtures or equipment from a store or property owned or leased in the two counties that is no longer in operation as a supermarket.
The Commission vote to announce the proposed consent agreement for public comment was 4-0.
A summary of the proposed consent agreement will be published in the Federal Register shortly. The agreement 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, 600 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 $11,000.
Copies of the complaint, proposed consent agreement and an analysis of the proposed consent agreement to aid public comment 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; 877-FTC-HELP (877-382-4357); TDD for the hearing impaired 1-866-653-4261. Consent agreements subject to public comment also are available by calling 202-326-3627. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.
(FTC File No. 991 0041)