IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

FEDERAL TRADE COMMISSION
600 Pennsylvania Ave. N.W.
Washington, D.C. 20580

v.

THE KROGER COMPANY
1014 Vine St.
Cincinnati, Ohio 45202,
and
WINN-DIXIE STORES, INC.
5050 Edgewood Court
Jacksonville, Florida 32254.

Civil Action No.:

COMPLAINT FOR PRELIMINARY INJUNCTION PURSUANT TO SECTION 13(b) OF THE FEDERAL TRADE COMMISSION ACT

Plaintiff, the Federal Trade Commission ("FTC" or "Commission"), by its designated attorneys, petitions the Court, pursuant to Section 13(b) of the Federal Trade Commission Act, 15 U.S.C. § 53(b), for a preliminary injunction enjoining defendant The Kroger Co. ("Kroger"), including its domestic and foreign agents, divisions, subsidiaries, affiliates, partnerships, or joint ventures, from acquiring through a merger or otherwise any stock, assets, or other interest, either directly or indirectly, from defendant Winn-Dixie Stores, Inc. ("Winn-Dixie"); thereby maintaining the status quo during the pendency of an administrative proceeding, challenging defendants' proposed combination, that will be commenced by the Commission pursuant to Section 5 of the FTC Act, 15 U.S.C. § 45, and Sections 7 and 11 of the Clayton Act, 15 U.S.C. §§ 18 and 21.

JURISDICTION AND VENUE

1. Jurisdiction is based on Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), and 28 U.S.C. §§ 1337 and 1345. Venue is proper under Section 13(b) of the FTC Act; 28 U.S.C. § 1391(b) and (c); and Section 12 of the Clayton Act, 15 U.S.C. § 22.

THE PARTIES

2. The Commission is an administrative agency of the United States Government established, organized, and existing pursuant to the FTC Act, 15 U.S.C. § 41 et seq., with its principal offices at 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The Commission is vested with authority and responsibility for enforcing, inter alia, Section 5 of the FTC Act and Section 7 of the Clayton Act.

3. Defendant Kroger is a for-profit corporation existing under the laws of the State of Ohio, with its principal place of business at 1014 Vine St., Cincinnati, Ohio 45202. Kroger owns and operates approximately 2,300 supermarkets in 31 states under approximately 12 banners, including the "Kroger" banner.

4. Defendant Winn-Dixie is a for-profit corporation existing under the laws of the State of Florida, with its principal place of business at 5050 Edgewood Court, Jacksonville, Florida 32254. Winn-Dixie owns and operates more than 1100 supermarkets in 14 states under the "Winn-Dixie" banner.

5. Kroger and Winn-Dixie are engaged in commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44, and Section 1 of the Clayton Act, 15 U.S.C. § 12.

6. Kroger and Winn-Dixie transact business within Texas.

SECTION 13(b) OF THE FTC ACT

7. Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), provides in pertinent part:

(b) Whenever the Commission has reason to believe--

(1) that any person, partnership, or corporation is violating, or is about to violate, any provision of law enforced by the Federal Trade Commission, and

(2) that the enjoining thereof pending the issuance of a complaint by the Commission and until such complaint is dismissed by the Commission or set aside by the court on review, or until the order of the Commission made thereon has become final, would be in the interest of the public--

the Commission by any of its attorneys designated by it for such purpose may bring suit in a district court of the United States to enjoin any such act or practice. Upon a proper showing that, weighing the equities and considering the Commission's likelihood of ultimate success, such action would be in the public interest, and after notice to the defendant, a temporary restraining order or a preliminary injunction may be granted without bond . . . .

THE PROPOSED MERGER AND THE COMMISSION'S RESPONSE

8. On November 1, 1999, Kroger and Winn-Dixie entered into an agreement whereby Kroger would acquire the assets of Winn-Dixie Texas, Inc. ("Winn-Dixie Texas"), a wholly-owned subsidiary of Winn-Dixie.

9. On June 2, 2000, the Commission authorized the commencement of an action under Section 13(b) of the FTC Act to seek a preliminary injunction barring the proposed merger during the pendency of administrative proceedings.

10. The defendants have advised the Commission they will not consummate the proposed merger until after the Court issues its opinion on the request for a preliminary injunction.

11. In authorizing the commencement of this action, the Commission determined that such an injunction is in the public interest and that it has reason to believe that the aforesaid proposed merger would violate Section 7 of the Clayton Act because it may substantially lessen competition and/or tend to create monopolies in the relevant markets.

LIKELIHOOD OF SUCCESS ON THE MERITS AND NEED FOR RELIEF

12. The Commission is likely ultimately to succeed in demonstrating, in administrative proceedings to adjudicate the legality of the proposed merger, that the proposed merger would violate Section 7 of the Clayton Act. In particular, the Commission is likely ultimately to succeed in demonstrating, inter alia, that:

a. The relevant line of commerce (i.e., the product market) in which the competitive effects of the proposed merger may be assessed is the retail sale of food and grocery items in supermarkets.

b. Among the relevant sections of the country (i.e., the geographic markets) within which to assess the competitive effects of the proposed merger are the following:

(1) the Fort Worth, Texas metropolitan area, which includes the city of Fort Worth, the adjacent suburban communities to the northeast of the city of Fort Worth (including North Richland Hills, Euless, Hurst, Grapevine, Keller, Watauga, Richland Hills, Haltom City, South Lake, and Bedford), and the adjacent suburban communities to the southeast of the city of Fort Worth (including Arlington, Grand Prairie and Mansfield);

(2) Granbury, Texas;

(3) Weatherford, Texas; and

(4) Brownwood, Texas.

c. Kroger and Winn-Dixie are the second the third largest supermarket firms in the Fort Worth, Texas metropolitan area, the first and third largest in Granbury, the first and fourth largest in Weatherford, and the second and third largest in Brownwood.

d. The effect of the proposed merger, if consummated, may be substantially to lessen competition in the relevant markets by, among other things, eliminating an effective competitor, eliminating or reducing substantial actual and potential competition between Kroger and Winn-Dixie, and providing the merged entity with the ability to exercise market power. e. Substantial and effective entry into the relevant markets is difficult.

13. The reestablishment of Kroger and Winn-Dixie as independent viable competitive entities if they were to merge would be difficult, and there is a substantial likelihood that it would be difficult or impossible to restore the businesses as they originally existed. Furthermore, it is likely that substantial interim harm to competition would occur even if suitable divestiture remedies could be devised.

14. For the reasons stated above, the granting of the injunctive relief sought is in the public interest.

WHEREFORE, the Commission requests that the Court:

1. Preliminarily enjoin defendants Kroger and Winn-Dixie, and all affiliates of defendants, from taking any further steps to consummate, directly or indirectly, their proposed merger of their businesses, or any other acquisition of stock, assets, or other interest, either directly or indirectly;

2. Maintain the status quo pending the issuance of an administrative complaint by the Commission challenging such acquisition, and until such complaint is dismissed by the Commission or set aside by a court on review, or until the order of the Commission made thereon has become final; and

3. Award such other and further relief as the Court may determine to be proper and just, including costs.

Respectfully submitted,

Dated: June 6, 2000