UNITED STATES OF AMERICA
AGREEMENT CONTAINING CONSENT ORDER
The Federal Trade Commission ("Commission"), having initiated an investigation of the proposed acquisition by The Kroger Co. ("Kroger"), through its wholly-owned subsidiary, Kroger Limited Partnership I, of substantially all of the assets of The John C. Groub Company, Inc. ("Groub"), and it now appearing that Kroger and Groub, hereinafter sometimes referred to as "Proposed Respondents," are willing to enter into an agreement containing a consent order ("Agreement") to divest certain assets and to cease and desist from certain acts, and providing for other relief:
IT IS HEREBY AGREED by and among Proposed Respondents, by their duly authorized officers and attorneys, and counsel for the Commission that:1. Proposed Respondent Kroger is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Ohio, with its office and principal place of business located at 1014 Vine Street, Cincinnati, Ohio 45202.
2. Proposed Respondent Groub is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Indiana, with its office and principal place of business located at 900 "A" Avenue East, Seymour, Indiana 47274.
3. Proposed Respondents admit all the jurisdictional facts set forth in the draft of complaint here attached.4. Proposed Respondents waive:
6. This Agreement is for settlement purposes only and does not constitute an admission by Proposed Respondents that the law has been violated as alleged in the draft of complaint here attached, or that the facts as alleged in the draft complaint, other than jurisdictional facts, are true.
7. This Agreement contemplates that, if it is accepted by the Commission, and if such acceptance is not subsequently withdrawn by the Commission pursuant to the provisions of Section 2.34 of the Commission's Rules, the Commission may, without further notice to the Proposed Respondents, (1) issue its complaint, corresponding in form and substance with the draft of complaint here attached, and its decision containing the following Order to divest and to cease and desist in disposition of the proceeding, and (2) make information public with respect thereto. When so entered, the Order shall have the same force and effect and may be altered, modified, or set aside in the same manner and within the same time provided by statute for other orders. The Order shall become final upon service. Delivery by the U.S. Postal Service of the complaint and decision containing the agreed-to order to Proposed Respondents' addresses as stated in this Agreement shall constitute service. Proposed Respondents waive any right they may have to any other manner of service. The complaint may be used in construing the terms of the Order, and no agreement, understanding, representation, or interpretation not contained in the Order or the Agreement may be used to vary or contradict the terms of the Order.
8. Proposed Respondents have read the proposed complaint and Order contemplated hereby. Proposed Respondents understand that once the Order has been issued, they will be required to file one or more compliance reports showing that they have fully complied with the Order. Proposed Respondents further understand that they may be liable for civil penalties in the amount provided by law for each violation of the Order after it becomes final. By signing this Agreement, Proposed Respondents represent that they can accomplish the full relief contemplated by this Agreement.
9. Proposed Respondents agree to comply with the proposed order from the date they sign the Agreement. Proposed Respondents agree that, in the event that the Commission withdraws its acceptance of this Agreement pursuant to the provisions of Section 2.34 of the Commission's Rules, Proposed Respondents will continue complying with Paragraph IV. of the proposed order until three (3) business days after the Commission withdraws such acceptance.
10. Within thirty (30) days of the date on which they sign this Agreement, Proposed Respondents shall submit an initial report, pursuant to Section 2.33 of the Commission's Rules, setting forth in detail the manner in which they are complying, and will comply, with the terms of Paragraphs II. and IV. of the Order. Such report will not become part of the public record unless and until the Commission accepts the Agreement for public comment.
IT IS ORDERED that, as used in this Order, the following definitions shall apply:
A. "Kroger" means The Kroger Co., its directors, officers, employees, agents, representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups, and affiliates controlled by The Kroger Co., and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.
B. "Groub" means The John C. Groub Company, Inc., its directors, officers, employees, agents, representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups, and affiliates controlled by The John C. Groub Company, Inc., and the respective directors, officers, employees, agents, representatives, successors, and assigns of each.
C. "Respondents" means Kroger and Groub, individually and collectively.
D. "Commission" means the Federal Trade Commission.
E. "Acquisition" means Kroger's proposed acquisition of substantially all of the assets of Groub pursuant to the Asset Purchase Agreement Between Kroger Limited Partnership I and the John C. Groub, Company, Inc. dated October 12, 1998.
F. "Assets To Be Divested" means the Supermarkets To Be Divested in this Order and all assets, leases, properties, government permits (to the extent transferable), customer lists, businesses and goodwill, tangible and intangible, related to or utilized in the Supermarkets To Be Divested, but shall not include those assets consisting of or pertaining to any of the Respondents' trade marks, trade dress, service marks, or trade names.
G. "Supermarket" means a full-line retail grocery store that carries a wide variety of food and grocery items in particular product categories, including bread and dairy products; frozen and refrigerated food and beverage products; fresh and prepared meats and poultry; produce, including fresh fruits and vegetables; shelf-stable food and beverage products, including canned and other types of packaged products; staple foodstuffs, which may include salt, sugar, flour, sauces, spices, coffee, and tea; and other grocery products, including nonfood items such as soaps, detergents, paper goods, other household products, and health and beauty aids.
H. "Supermarkets To Be Divested" means the following Supermarkets:
I. "Roundy's" means Roundy's, Inc., a corporation organized, existing and doing business under and by virtue of the laws of the State of Wisconsin, with its principal place of business located at 23000 Roundy Drive, Pewaukee, Wisconsin 53702.
J. "Groub Agreement" means the Purchase Agreement between Roundy's and Groub executed on June 10, 1999, for the divestiture by Groub of its stores listed in the Supermarkets To Be Divested.
K. "Kroger Agreement" means the Purchase Agreement between Roundy's and Kroger executed on June 22, 1999, for the divestiture by Kroger of its store listed in the Supermarkets To Be Divested.
L. "Roundy's Agreements" means the Groub Agreement and the Kroger Agreement.
M. "Acquirer(s)" means Roundy's and/or the entity or entities approved by the Commission to acquire the Assets To Be Divested pursuant to this Order, individually and collectively.
N. "Third Party Consents" means all consents from any other person, including all landlords, that are necessary to effect the complete transfer to the Acquirer(s) of the Assets To Be Divested.
IT IS FURTHER ORDERED that:
A. Respondents shall divest, absolutely and in good faith, the Assets To Be Divested to Roundy's, in accordance with the Roundy's Agreements (which agreements shall not be construed to vary or contradict the terms of this Order), no later than
whichever is earlier.
Provided, however, that if Respondents have divested the Assets To Be Divested to Roundy's pursuant to the Roundy's Agreements prior to the date the Order becomes final, and if, at the time the Commission determines to make the Order final, the Commission notifies Respondents that Roundy's is not an acceptable Acquirer or that either the Kroger Agreement or the Groub Agreement is not an acceptable manner of divestiture, then Respondents shall immediately rescind the respective transaction with Roundy's and shall divest the respective Assets To Be Divested within three (3) months of the date the Order becomes final, absolutely and in good faith, at no minimum price, to an Acquirer that receives the prior approval of the Commission and in a manner that receives the prior approval of the Commission.
Provided, further, that Respondents shall not be required to divest any front-end system, computer scanners, Kroger bascarts, satellite dishes, leased cable lines, fixtures, equipment or inventory, at any Supermarket To Be Divested that the Acquirer of the Assets To Be Divested indicates that it does not want to acquire, if the Commission approves the divestiture to such Acquirer and approves the manner of the divestiture excluding such assets.
B. Respondents shall obtain all required Third Party Consents prior to the closing of the Roundy's Agreements, or any other agreement pursuant to which the Assets To Be Divested are divested to an Acquirer.
C. The purpose of the divestitures is to ensure the continuation of the Assets To Be Divested as ongoing viable enterprises engaged in the Supermarket business and to remedy the lessening of competition resulting from the Acquisition as alleged in the Commission's complaint.
IT IS FURTHER ORDERED that:
A. If Respondents have not divested, absolutely and in good faith and with the Commission's prior approval, the Assets To Be Divested within the time required by Paragraph II of this Order, the Commission may appoint a trustee to divest the Assets To Be Divested. In the event that the Commission or the Attorney General brings an action pursuant to Section 5(l) of the Federal Trade Commission Act, 15 U.S.C. § 45(l), or any other statute enforced by the Commission, Respondents shall consent to the appointment of a trustee in such action. Neither the appointment of a trustee nor a decision not to appoint a trustee under this Paragraph shall preclude the Commission or the Attorney General from seeking civil penalties or any other relief available to it, including a court-appointed trustee, pursuant to Section 5(l) of the Federal Trade Commission Act, or any other statute enforced by the Commission, for any failure by the Respondents to comply with this Order.
B. If a trustee is appointed by the Commission or a court pursuant to Paragraph III.A. of this Order, Respondents shall consent to the following terms and conditions regarding the trustee's powers, duties, authority, and responsibilities:
IT IS FURTHER ORDERED that Respondents shall maintain the viability, marketability, and competitiveness of the Assets To Be Divested, and shall not cause the wasting or deterioration of the Assets To Be Divested, nor shall they cause the Assets To Be Divested to be operated in a manner inconsistent with applicable laws, nor shall they sell, transfer, encumber or otherwise impair the viability, marketability or competitiveness of the Assets To Be Divested. Respondents shall comply with the terms of this Paragraph until such time as Respondents have divested the Assets To Be Divested pursuant to the terms of this Order. Respondents shall conduct or cause to be conducted the business of the Assets To Be Divested in the regular and ordinary course and in accordance with past practice (including regular repair and maintenance efforts) and shall use their best efforts to preserve the existing relationships with suppliers, customers, employees, and others having business relations with the Assets To Be Divested in the ordinary course of business and in accordance with past practice. Respondents shall not terminate the operation of any Supermarket To Be Divested. Respondents shall continue to maintain the inventory of each Supermarket To Be Divested at levels and selections (e.g., stock-keeping units) consistent with those maintained by such Respondent(s) at such Supermarket in the ordinary course of business consistent with past practice. Respondents shall use best efforts to keep the organization and properties of each Supermarket To Be Divested intact, including current business operations, physical facilities, working conditions, and a work force of equivalent size, training, and expertise associated with the Supermarket. Included in the above obligations, Respondents shall, without limitation:
IT IS FURTHER ORDERED that, for a period of ten (10) years from the date this Order becomes final, Kroger shall not, directly or indirectly, through subsidiaries, partnerships, or otherwise, without providing advance written notification to the Commission:
Provided, however, that advance written notification shall not apply to the construction of new facilities by Kroger or the acquisition of or leasing of a facility that has not operated as a Supermarket within six (6) months prior to Kroger's offer to purchase or lease.
Said notification shall be given on the Notification and Report Form set forth in the Appendix to Part 803 of Title 16 of the Code of Federal Regulations as amended (hereinafter referred to as the "Notification"), and shall be prepared and transmitted in accordance with the requirements of that part, except that no filing fee will be required for any such Notification, notification shall be filed with the Secretary of the Commission, Notification need not be made to the United States Department of Justice, and Notification is required only of Kroger and not of any other party to the transaction. Kroger shall provide the Notification to the Commission at least thirty (30) days prior to consummating any such transaction (hereinafter referred to as the "first waiting period"). If, within the first waiting period, representatives of the Commission make a written request for additional information or documentary material (within the meaning of 16 C.F.R. § 803.20), Kroger shall not consummate the transaction until twenty (20) days after substantially complying with such request. Early termination of the waiting periods in this Paragraph may be requested and, where appropriate, granted by letter from the Bureau of Competition. Provided, however, that prior notification shall not be required by this Paragraph for a transaction for which notification is required to be made, and has been made, pursuant to Section 7A of the Clayton Act, 15 U.S.C. § 18a.
IT IS FURTHER ORDERED that, for a period of ten (10) years commencing on the date this Order becomes final:
IT IS FURTHER ORDERED that:
A. Within thirty (30) days after the date Respondents signed the Agreement Containing Consent Order and every thirty (30) days thereafter until Respondents have fully complied with the provisions of Paragraphs II, III, and IV of this Order, Respondents shall submit to the Commission verified written reports setting forth in detail the manner and form in which they intend to comply, are complying, and have complied with Paragraphs II, III, and IV of this Order. Respondents shall include in their compliance reports, among other things that are required from time to time, a full description of the efforts being made to comply with Paragraphs II, III, and IV of the Order, including a description of all substantive contacts or negotiations for divestitures and the identity of all parties contacted. Respondents shall include in their compliance reports copies of all written communications to and from such parties, all internal memoranda, and all reports and recommendations concerning divestiture.
B. One (1) year from the date this Order becomes final, annually for the next nine (9) years on the anniversary of the date this Order becomes final, and at other times as the Commission may require, Kroger shall file verified written reports with the Commission setting forth in detail the manner and form in which it has complied and is complying with this Order.
IT IS FURTHER ORDERED that Respondents shall notify the Commission at least thirty (30) days prior to any proposed change in the corporate Respondents, such as dissolution, assignment, sale resulting in the emergence of a successor corporation, or the creation or dissolution of subsidiaries or any other change in Respondents that may affect compliance obligations arising out of the Order.
IT IS FURTHER ORDERED that, for the purpose of determining or securing compliance with this Order, upon written request with five (5) days' notice, Respondents shall permit any duly authorized representative of the Commission:
Signed this day of July, 1999
THE KROGER CO., a corporation
Robin M. Olinger
Attorney, The Kroger Co. Law Department
Deborah L. Feinstein
Arnold & Porter
Counsel for The Kroger Co.
THE JOHN C. GROUB COMPANY, INC., a corporation
James T. McCoy, President
Eric R. Moy
Barnes & Thornburg
Counsel for The John C. Groub Company, Inc.
FEDERAL TRADE COMMISSION
Michael B. Rose
Cleveland Regional Office
Laurel A. Price
Cleveland Regional Office
William J. Baer
Bureau of Competition