Koninklijke Ahold N.V./Safeway, Inc.; Analysis of Agreement Containing Consent Orders To Aid Public Comment, 37674-37677 [2012-15308]
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Federal Register / Vol. 77, No. 121 / Friday, June 22, 2012 / Notices
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Putnam State Bank ...........................................
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[FR Doc. 2012–15298 Filed 6–21–12; 8:45 am]
BILLING CODE 6714–01–P
FEDERAL ELECTION COMMISSION
Sunshine Act Meeting Notice
Federal Election Commission.
Wednesday, June 27,
2012 at 10:00 a.m.
PLACE: 999 E Street, NW., Washington,
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STATUS: This hearing will be open to the
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ITEM TO BE DISCUSSED:
Audit Hearing: Washington State
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Individuals who plan to attend and
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AGENCY:
DATE AND TIME:
Shawn Woodhead Werth,
Secretary and Clerk of the Commission.
[FR Doc. 2012–15423 Filed 6–20–12; 4:15 pm]
Board of Governors of the Federal Reserve
System, June 19, 2012.
Margaret McCloskey Shanks,
Associate Secretary of the Board.
BILLING CODE 6715–01–P
FEDERAL RESERVE SYSTEM
[FR Doc. 2012–15268 Filed 6–21–12; 8:45 am]
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Formations of, Acquisitions by, and
Mergers of Savings and Loan Holding
Companies
The companies listed in this notice
have applied to the Board for approval,
pursuant to the Home Owners’ Loan Act
(12 U.S.C. 1461 et seq.) (HOLA),
Regulation LL (12 CFR part 238), and
Regulation MM (12 CFR part 239), and
all other applicable statutes and
regulations to become a savings and
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The applications listed below, as well
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Board, are available for immediate
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persons may express their views in
writing on the standards enumerated in
the HOLA (12 U.S.C. 1467a(e)). If the
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BILLING CODE 6210–01–P
FEDERAL TRADE COMMISSION
[File No. 121 0055]
Koninklijke Ahold N.V./Safeway, Inc.;
Analysis of Agreement Containing
Consent Orders To Aid Public
Comment
Federal Trade Commission.
Proposed Consent Agreement.
AGENCY:
ACTION:
The consent agreement in this
matter settles alleged violations of
federal law prohibiting unfair or
deceptive acts or practices or unfair
methods of competition. The attached
Analysis to Aid Public Comment
describes both the allegations in the
SUMMARY:
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State
FL
GA
TN
Date closed
6/15/2012
6/15/2012
6/15/2012
draft complaint and the terms of the
consent order—embodied in the consent
agreement—that would settle these
allegations.
DATES: Comments must be received on
or before July 16, 2012.
ADDRESSES: Interested parties may file a
comment online or on paper, by
following the instructions in the
Request for Comment part of the
SUPPLEMENTARY INFORMATION section
below. Write ‘‘Ahold, File No. 121
0055’’ on your comment, and file your
comment online at https://
ftcpublic.commentworks.com/ftc/
aholdconsent, by following the
instructions on the web-based form. If
you prefer to file your comment on
paper, mail or deliver your comment to
the following address: Federal Trade
Commission, Office of the Secretary,
Room H–113 (Annex D), 600
Pennsylvania Avenue NW., Washington,
DC 20580.
FOR FURTHER INFORMATION CONTACT: Jill
M. Frumin (202–326–2758), FTC,
Bureau of Competition, 600
Pennsylvania Avenue NW., Washington,
DC 20580.
SUPPLEMENTARY INFORMATION: Pursuant
to section 6(f) of the Federal Trade
Commission Act, 38 Stat. 721, 15 U.S.C.
46(f), and § 2.34 the Commission Rules
of Practice, 16 CFR 2.34, notice is
hereby given that the above-captioned
consent agreement containing a consent
order to cease and desist, having been
filed with and accepted, subject to final
approval, by the Commission, has been
placed on the public record for a period
of thirty (30) days. The following
Analysis to Aid Public Comment
describes the terms of the consent
agreement, and the allegations in the
complaint. An electronic copy of the
full text of the consent agreement
package can be obtained from the FTC
Home Page (for June 15, 2012), on the
World Wide Web, at https://www.ftc.gov/
os/actions.shtm. A paper copy can be
obtained from the FTC Public Reference
Room, Room 130–H, 600 Pennsylvania
Avenue NW., Washington, DC 20580,
either in person or by calling (202) 326–
2222.
You can file a comment online or on
paper. For the Commission to consider
your comment, we must receive it on or
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Federal Register / Vol. 77, No. 121 / Friday, June 22, 2012 / Notices
before July 16, 2012. Write ‘‘Ahold, File
No. 121 0055’’ on your comment. Your
comment—including your name and
your state—will be placed on the public
record of this proceeding, including, to
the extent practicable, on the public
Commission Web site, at https://
www.ftc.gov/os/publiccomments.shtm.
As a matter of discretion, the
Commission tries to remove individuals’
home contact information from
comments before placing them on the
Commission Web site.
Because your comment will be made
public, you are solely responsible for
making sure that your comment does
not include any sensitive personal
information, like anyone’s Social
Security number, date of birth, driver’s
license number or other state
identification number or foreign country
equivalent, passport number, financial
account number, or credit or debit card
number. You are also solely responsible
for making sure that your comment does
not include any sensitive health
information, like medical records or
other individually identifiable health
information. In addition, do not include
any ‘‘[t]rade secret or any commercial or
financial information which is obtained
from any person and which is privileged
or confidential,’’ as provided in Section
6(f) of the FTC Act, 15 U.S.C. 46(f), and
FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2).
In particular, do not include
competitively sensitive information
such as costs, sales statistics,
inventories, formulas, patterns, devices,
manufacturing processes, or customer
names.
If you want the Commission to give
your comment confidential treatment,
you must file it in paper form, with a
request for confidential treatment, and
you have to follow the procedure
explained in FTC Rule 4.9(c), 16 CFR
4.9(c).1 Your comment will be kept
confidential only if the FTC General
Counsel, in his or her sole discretion,
grants your request in accordance with
the law and the public interest.
Postal mail addressed to the
Commission is subject to delay due to
heightened security screening. As a
result, we encourage you to submit your
comments online. To make sure that the
Commission considers your online
comment, you must file it at https://
ftcpublic.commentworks.com/ftc/
aholdconsent by following the
instructions on the web-based form. If
this Notice appears at https://
1 In particular, the written request for confidential
treatment that accompanies the comment must
include the factual and legal basis for the request,
and must identify the specific portions of the
comment to be withheld from the public record. See
FTC Rule 4.9(c), 16 CFR 4.9(c).
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www.regulations.gov/#!home, you also
may file a comment through that Web
site.
If you file your comment on paper,
write ‘‘Ahold, File No. 121 0055’’ on
your comment and on the envelope, and
mail or deliver it to the following
address: Federal Trade Commission,
Office of the Secretary, Room H–113
(Annex D), 600 Pennsylvania Avenue
NW., Washington, DC 20580. If possible,
submit your paper comment to the
Commission by courier or overnight
service.
Visit the Commission Web site at
https://www.ftc.gov to read this Notice
and the news release describing it. The
FTC Act and other laws that the
Commission administers permit the
collection of public comments to
consider and use in this proceeding as
appropriate. The Commission will
consider all timely and responsive
public comments that it receives on or
before July 16, 2012. You can find more
information, including routine uses
permitted by the Privacy Act, in the
Commission’s privacy policy, at https://
www.ftc.gov/ftc/privacy.htm.
Analysis of Agreement Containing
Consent Order To Aid Public Comment
I. Introduction and Background
The Federal Trade Commission
(‘‘Commission’’) has accepted for public
comment, and subject to final approval,
an Agreement Containing Consent
Orders (‘‘Consent Agreement’’) from
Koninklijke Ahold N.V. (‘‘Ahold’’), its
subsidiary, Giant Food Stores, LLC
(‘‘Giant’’), Safeway Inc. (‘‘Safeway’’),
and its subsidiary (‘‘Genuardi’s’’)
(collectively ‘‘Respondents’’), that is
designed to remedy the anticompetitive
effects that otherwise would result from
Ahold’s acquisition of certain
Genuardi’s supermarkets owned by
Safeway. The proposed Consent
Agreement requires divestiture of the
Genuardi’s supermarket in Newtown,
Pennsylvania, and its related assets to a
Commission-approved purchaser. The
proposed Consent Agreement also
requires Ahold and Safeway to divest all
related assets and real property
necessary to ensure the buyer of the
divested supermarket will be able to
quickly and fully replicate the
competition that would have been
eliminated by the acquisition.
The proposed Consent Agreement has
been placed on the public record for 30
days to solicit comments from interested
persons. Comments received during this
period will become part of the public
record. After 30 days, the Commission
again will review the proposed Consent
Agreement and comments received, and
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37675
decide whether it should withdraw the
Consent Agreement, modify it, or make
it final without modification.
On January 4, 2012, Ahold and
Safeway executed an agreement
whereby Ahold would acquire 16 of the
Genuardi’s supermarkets from Safeway.
The Commission’s Complaint alleges
that the proposed acquisition, if
consummated, would violate Section 7
of the Clayton Act, as amended, 15
U.S.C. 18, and Section 5 of the Federal
Trade Commission Act, as amended, 15
U.S.C. 45, by removing an actual, direct,
and substantial supermarket competitor
from the Newtown, Pennsylvania,
geographic market. The proposed
Consent Agreement would remedy the
alleged violations by requiring a
divestiture that will replace competition
that otherwise would be eliminated in
this market as a result of the acquisition.
II. The Parties
Ahold owns or has an interest in
2,970 supermarkets and specialty stores
in Europe and the United States. Net
sales for 2010 were $36.8 billion, which
represents a 5.7% increase over 2009.
Ahold USA is organized into four retail
divisions: Giant Carlisle, Giant
Landover, Stop & Shop New York
Metro, and Stop & Shop New England.
Peapod, a grocery delivery service, also
is included within Ahold USA.
Safeway is one of the largest foodand-drug retailers in the United States.
It operates over 1,700 stores across the
United States under a variety of
banners, including Vons in southern
California and Nevada, Randalls and
Tom Thumb in Texas, Carrs in Alaska,
Genuardi’s in suburban Philadelphia,
and Safeway throughout the rest of the
country. There were 36 Genuardi’s
stores operating in Pennsylvania, New
York, and New Jersey when Safeway
purchased the chain in February 2001.
Safeway is exiting the Philadelphia
metropolitan market by selling or
closing all 24 remaining Genuardi’s
markets in eastern Pennsylvania (Bucks,
Montgomery, Delaware, and Chester
counties), as well as four stores in New
Jersey.
III. Supermarket Competition in
Newtown, Pennsylvania
Ahold’s proposed acquisition of
Genuardi’s in Newtown presents
antitrust concerns in the retail sale of
groceries. Competition in food retailing
depends on proximity in both retailing
format and in geographic location.
Stores with similar formats located
nearby each other provide a greater
competitive constraint on each other’s
pricing than do stores of different
formats or stores located at a greater
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distance. Giant and Genuardi’s have
stores in the Newtown area, and they
have a very similar format.
Giant and Genuardi’s compete as
supermarket retailers of grocery
products. Supermarkets are full-line
retail grocery stores that sell thousands
of food and non-food products that
typical families regularly consume at
home (e.g., fresh meat and seafood,
dairy products, frozen goods, beverages,
bakery goods, dry groceries, soaps,
detergents, and health and beauty aids)
and offer these products in a variety of
sizes and brands. Supermarkets are large
stores with at least 10,000 square feet of
selling space and 30,000 to 60,000
different items, typically referred to as
stock-keeping units or ‘‘SKUs.’’ This
broad set of products and services
provides a ‘‘one-stop shopping’’
experience for consumers by enabling
them to shop in a single store for all of
their food and grocery needs. The ability
to offer consumers one-stop shopping is
a critical differentiating factor between
supermarkets and other food retailers.
Other types of retailers that sell food
and grocery items compete less strongly
with Giant and Genuardi’s. These others
include ‘‘mom & pop’’ stores,
convenience stores, specialty food
stores, ‘‘premium natural and organic’’
markets,2 mass merchants, and club
stores. Although these types of retailers
provide some level of competition to
supermarkets, they do not have a
supermarket’s full complement of
products and services, which means
that if customers elect to shop at these
retailers, they also must shop at a
supermarket in order to satisfy their
weekly grocery needs. Because of this,
shoppers at one supermarket are more
likely to respond to a price increase by
switching to another supermarket than
to choose a store with a different format,
if both are equally convenient.3
To evaluate the effects of the
acquisition on market concentration
levels, we define the product market to
be the retail sale of grocery products in
supermarkets, consistent with practice
in all but one prior grocery retailing case
settled by consent order.4
2 See FTC v. Whole Foods Mkt., Inc., 533 F.3d 869
(D.C. Cir. 2008).
3 Shoppers typically do not view these other food
and grocery retailers as adequate substitutes for
supermarkets and would be unlikely to switch to
one of these retailers in response to a small but
significant price increase or ‘‘SSNIP’’ by a
hypothetical supermarket monopolist. See U.S. DOJ
and FTC Horizontal Merger Guidelines § 4.1.1
(2010).
4 See, e.g., Shaw’s/Star Markets, Docket C–3934
(June 28, 1999); Kroger/Fred Meyer, Docket C–3917
(January 10, 2000); Albertson’s/American Stores,
Docket C–3986 (June 22, 1999); Ahold/Giant,
Docket C–3861 (April 5, 1999); Albertson’s/Buttrey,
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Customers shopping at supermarkets
are motivated primarily by convenience
and, as a result, competition for
supermarkets is local in nature.
Generally, the overwhelming majority of
consumers’ grocery shopping occurs at
stores located very close to where they
live. Location is a critical component for
closeness of competition between
supermarkets. Supermarkets are a
differentiated products industry with
location serving as one of the primary
drivers of differentiation and
competition. A supermarket tends to be
in most direct competition with those
supermarkets located closest to it. Giant
and Genuardi’s are located
approximately two miles from each
other in the Newtown area, and the
supermarkets’ primary trade areas
overlap significantly with each other.
Acme is the only other supermarket
operating in this area. The next-closest
supermarket is located at least twice as
far away as the Newtown supermarkets
are to each other.
The relevant geographic market in
which to measure concentration and
analyze the competitive implications of
Ahold’s proposed acquisition of the
Newtown Genuardi’s is a roughly three
to three-and-a-half mile circle measured
from the center of Newtown and made
up of the U.S. census tracts surrounding
this area. Specifically, it consists of
Newtown Township, Newtown
Borough, and the portion of Middletown
Township north of the line formed by
Bridgetown Pike and Langhorne Yardley
Road in Bucks County, Pennsylvania.
The Newtown, Pennsylvania, market
for the sale of retail food and groceries
in supermarkets is already highly
concentrated, and would become
significantly more so post-acquisition.
The acquisition would reduce the
number of supermarket competitors
from three to two, creating a duopoly
between Giant and Acme Markets.
Under the Herfindal-Hirschman Index
(‘‘HHI’’), which is the standard measure
of market concentration under the 2010
Department of Justice and Federal Trade
Commission Merger Guidelines, an
acquisition is presumed to create or
enhance market power or facilitate its
exercise if it increases the HHI by more
than 200 points and results in a postacquisition HHI that exceeds 2,500
points. Giant’s proposed acquisition of
Docket C–3838 (December 8, 1998); Jitney-Jungle
Stores of America, Inc., Docket C–3784 (January 30,
1998). But see Wal-Mart/Supermercados Amigo,
Docket C–4066 (November 21, 2002) (the
Commission’s complaint alleged that in Puerto
Rico, club stores should be included in a product
market that included supermarkets because club
stores in Puerto Rico enabled consumers to
purchase substantially all of their weekly food and
grocery requirements in a single shopping visit).
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the Newtown Genuardi’s creates market
concentration levels well in excess of
these thresholds. The post-acquisition
HHI is 5000–5017, representing an
increase of between 1221–1373 from
pre-acquisition levels.
Staff’s investigation and analysis
demonstrate that Giant and Genuardi’s
are close competitors that compete
directly for grocery shoppers in
Newtown. Because a substantial number
of consumers in Newtown consider
Giant’s and Genuardi’s stores to be close
substitutes, a post-acquisition price
increase at one (or both) of Giant’s stores
would be profitable because the other
Giant-owned supermarket would likely
recoup enough of the otherwise lost
volume for the price increase to be
profitable. Absent relief, the transaction
may also facilitate tacit or express
coordination since Acme would be
Giant’s only remaining competitor in
Newtown post-acquisition. Given the
transparency of pricing and promotional
practices between supermarkets and the
fact that supermarkets ‘‘price check’’
competitors in the ordinary course of
business, reducing the number of nearby
competitors from three to two may
facilitate collusion between the
remaining supermarket competitors by
making coordination easier to establish
and monitor.
New entry is unlikely to deter or
counteract the likely anticompetitive
effects of the proposed acquisition.
Normally, as here, it takes two or more
years for an entrant to secure a viable
location, obtain the necessary permits
and governmental approvals, build its
retail establishment, and open to
customers. Moreover, incumbent
supermarkets often oppose entry efforts
by competitor supermarkets, delaying
further any potential entry into the
relevant market. It is unlikely that entry
sufficient to achieve a significant market
impact would occur in a timely manner.
IV. The Proposed Consent Agreement
The proposed remedy, which requires
the divestiture of the Genuardi’s store in
Newtown to a Commission-approved
purchaser, will be sufficient to restore
fully the competition that otherwise
would be eliminated in the market as a
result of the acquisition.
Respondents Ahold and Genuardi’s
have agreed to divest the Newtown
Genuardi’s supermarket to McCaffrey’s.
McCaffrey’s appears to be a highly
suitable purchaser, and is wellpositioned to enter the relevant market
and prevent the increase in market
concentration and likely competitive
harm that otherwise would have been
caused by the acquisition.
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37677
Federal Register / Vol. 77, No. 121 / Friday, June 22, 2012 / Notices
All of the current McCaffrey’s
supermarkets are located outside the
relevant geographic area. Its Yardley,
Pennsylvania, store is approximately six
miles, and approximately 15 minutes
driving time, from the Genuardi’s in
Newtown. The Newtown Genuardi’s is
outside McCaffrey’s primary service
area and vice versa.
The proposed Order requires
Respondents Ahold and Safeway to
divest the assets of the Genuardi’s to
McCaffrey’s no later than ten days
following Ahold’s acquisition of the 16
Genuardi’s stores that are subject to the
Asset Purchase Agreement. If
McCaffrey’s ultimately is not approved
by the Commission to purchase the
assets, Respondents must immediately
rescind the divestiture and divest the
Newtown Genuardi’s assets to a buyer
that receives the Commission’s prior
approval. The proposed Order contains
additional provisions designed to
ensure the adequacy of the proposed
relief. For example, for a period of one
year, the Order prohibits Respondents
from interfering with the hiring of or
employment of any employees currently
working at the Newtown Genuardi’s.
Additionally, for a period of ten years,
Ahold is required to give the
Commission prior notice of plans to
acquire a supermarket, or an interest in
a supermarket, that has operated or is
operating in Newtown, Pennsylvania.
interpretation of the proposed Consent
Agreement, nor does it modify its terms
in any way.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2012–15308 Filed 6–21–12; 8:45 am]
BILLING CODE 6750–01–P
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Disease Control and
Prevention
[30-Day–12–0210]
Agency Forms Undergoing Paperwork
Reduction Act Review
The Centers for Disease Control and
Prevention (CDC) publishes a list of
information collection requests under
review by the Office of Management and
Budget (OMB) in compliance with the
Paperwork Reduction Act (44 U.S.C.
Chapter 35). To request a copy of these
requests, call the CDC Reports Clearance
Officer at (404) 639–7570 or send an
email to omb@cdc.gov. Send written
comments to CDC Desk Officer, Office of
Management and Budget, Washington,
DC or by fax to (202) 395–5806. Written
comments should be received within 30
days of this notice.
V. Opportunity for Public Comment
Proposed Project
The proposed Consent Agreement has
been placed on the public record for 30
days to solicit comments from interested
persons. Comments received during this
period will become part of the public
record. After 30 days, the Commission
will again review the proposed Consent
Agreement, as well as the comments
received, and will decide whether to
modify the proposed Consent
Agreement, withdraw its acceptance of
the proposed Consent Agreement, or
issue its final Consent Orders.
The sole purpose of this Analysis is
to facilitate public comment on the
proposed Consent Agreement. This
Analysis does not constitute an official
List of Ingredients Added to Tobacco
in the Manufacture of Cigarette
Products—Extension—Office on
Smoking and Health, National Center
for Chronic Disease Prevention and
Health Promotion (NCCDPHP), Centers
for Disease Control and Prevention
(CDC).
Background and Brief Description
The Centers for Disease Control and
Prevention (CDC), Office on Smoking
and Health (OSH) has the primary
responsibility for the Department of
Health and Human Services (HHS)
smoking and health program. HHS’s
overall goal is to reduce death and
disability resulting from cigarette
smoking and other forms of tobacco use
through programs of information,
education and research.
Since 1986, as required by the
Comprehensive Smoking Education Act
of 1984 (CSEA, 15 U.S.C. 1336 or
Pub. L. 98–474), CDC has collected
information about the ingredients used
in cigarette products. Respondents are
commercial cigarette manufacturers,
packagers, or importers (or their
representatives), who are required by
the CSEA to submit ingredient reports to
HHS on an annual basis.
Respondents are not required to
submit specific forms, however, they are
required to submit a list of all
ingredients used in their products. CDC
requires the ingredient report to be
submitted by chemical name and
Chemical Abstract Service (CAS)
Registration Number, consistent with
accepted reporting practices for other
companies currently required to report
ingredients added to other consumer
products. Typically, respondents submit
a summary report to CDC with the
ingredient information for multiple
products, or a statement that there are
no changes to their previously
submitted ingredient report.
Ingredient reports for new products
are due at the time of first importation.
Thereafter, ingredient reports are due
annually on March 31. Information is
submitted to OSH by mailing a written
report on the respondent’s letterhead, by
CD, three-inch floppy disk, or thumb
drive. Electronic mail submissions are
not accepted. The estimated burden per
response is 6.5 hours.
Upon receipt and verification of the
annual ingredient report, OSH issues a
Certificate of Compliance to the
respondent. OSH also uses the
information to report to the Congress (as
deemed appropriate) discussing the
health effects of these ingredients.
There are no costs to respondents
other than their time. The total
estimated annualized burden hours are
501.
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ESTIMATED ANNUALIZED BURDEN HOURS
Type of respondents
Number of
respondents
Number of
responses per
respondent
Average
burden per
response
(in hours)
Cigarette Manufacturers, Packagers, and Importers ..................................................................
77
1
6.5
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]]>Agencies
[Federal Register Volume 77, Number 121 (Friday, June 22, 2012)]
[Notices]
[Pages 37674-37677]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-15308]
=======================================================================
-----------------------------------------------------------------------
FEDERAL TRADE COMMISSION
[File No. 121 0055]
Koninklijke Ahold N.V./Safeway, Inc.; Analysis of Agreement
Containing Consent Orders To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed Consent Agreement.
-----------------------------------------------------------------------
SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public Comment describes both the allegations in the draft
complaint and the terms of the consent order--embodied in the consent
agreement--that would settle these allegations.
DATES: Comments must be received on or before July 16, 2012.
ADDRESSES: Interested parties may file a comment online or on paper, by
following the instructions in the Request for Comment part of the
SUPPLEMENTARY INFORMATION section below. Write ``Ahold, File No. 121
0055'' on your comment, and file your comment online at https://ftcpublic.commentworks.com/ftc/aholdconsent, by following the
instructions on the web-based form. If you prefer to file your comment
on paper, mail or deliver your comment to the following address:
Federal Trade Commission, Office of the Secretary, Room H-113 (Annex
D), 600 Pennsylvania Avenue NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT: Jill M. Frumin (202-326-2758), FTC,
Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC
20580.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and Sec. 2.34 the
Commission Rules of Practice, 16 CFR 2.34, notice is hereby given that
the above-captioned consent agreement containing a consent order to
cease and desist, having been filed with and accepted, subject to final
approval, by the Commission, has been placed on the public record for a
period of thirty (30) days. The following Analysis to Aid Public
Comment describes the terms of the consent agreement, and the
allegations in the complaint. An electronic copy of the full text of
the consent agreement package can be obtained from the FTC Home Page
(for June 15, 2012), on the World Wide Web, at https://www.ftc.gov/os/actions.shtm. A paper copy can be obtained from the FTC Public
Reference Room, Room 130-H, 600 Pennsylvania Avenue NW., Washington, DC
20580, either in person or by calling (202) 326-2222.
You can file a comment online or on paper. For the Commission to
consider your comment, we must receive it on or
[[Page 37675]]
before July 16, 2012. Write ``Ahold, File No. 121 0055'' on your
comment. Your comment--including your name and your state--will be
placed on the public record of this proceeding, including, to the
extent practicable, on the public Commission Web site, at https://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the
Commission tries to remove individuals' home contact information from
comments before placing them on the Commission Web site.
Because your comment will be made public, you are solely
responsible for making sure that your comment does not include any
sensitive personal information, like anyone's Social Security number,
date of birth, driver's license number or other state identification
number or foreign country equivalent, passport number, financial
account number, or credit or debit card number. You are also solely
responsible for making sure that your comment does not include any
sensitive health information, like medical records or other
individually identifiable health information. In addition, do not
include any ``[t]rade secret or any commercial or financial information
which is obtained from any person and which is privileged or
confidential,'' as provided in Section 6(f) of the FTC Act, 15 U.S.C.
46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do
not include competitively sensitive information such as costs, sales
statistics, inventories, formulas, patterns, devices, manufacturing
processes, or customer names.
If you want the Commission to give your comment confidential
treatment, you must file it in paper form, with a request for
confidential treatment, and you have to follow the procedure explained
in FTC Rule 4.9(c), 16 CFR 4.9(c).\1\ Your comment will be kept
confidential only if the FTC General Counsel, in his or her sole
discretion, grants your request in accordance with the law and the
public interest.
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\1\ In particular, the written request for confidential
treatment that accompanies the comment must include the factual and
legal basis for the request, and must identify the specific portions
of the comment to be withheld from the public record. See FTC Rule
4.9(c), 16 CFR 4.9(c).
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Postal mail addressed to the Commission is subject to delay due to
heightened security screening. As a result, we encourage you to submit
your comments online. To make sure that the Commission considers your
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/aholdconsent by following the instructions on the web-based form.
If this Notice appears at https://www.regulations.gov/#!home, you also
may file a comment through that Web site.
If you file your comment on paper, write ``Ahold, File No. 121
0055'' on your comment and on the envelope, and mail or deliver it to
the following address: Federal Trade Commission, Office of the
Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue NW.,
Washington, DC 20580. If possible, submit your paper comment to the
Commission by courier or overnight service.
Visit the Commission Web site at https://www.ftc.gov to read this
Notice and the news release describing it. The FTC Act and other laws
that the Commission administers permit the collection of public
comments to consider and use in this proceeding as appropriate. The
Commission will consider all timely and responsive public comments that
it receives on or before July 16, 2012. You can find more information,
including routine uses permitted by the Privacy Act, in the
Commission's privacy policy, at https://www.ftc.gov/ftc/privacy.htm.
Analysis of Agreement Containing Consent Order To Aid Public Comment
I. Introduction and Background
The Federal Trade Commission (``Commission'') has accepted for
public comment, and subject to final approval, an Agreement Containing
Consent Orders (``Consent Agreement'') from Koninklijke Ahold N.V.
(``Ahold''), its subsidiary, Giant Food Stores, LLC (``Giant''),
Safeway Inc. (``Safeway''), and its subsidiary (``Genuardi's'')
(collectively ``Respondents''), that is designed to remedy the
anticompetitive effects that otherwise would result from Ahold's
acquisition of certain Genuardi's supermarkets owned by Safeway. The
proposed Consent Agreement requires divestiture of the Genuardi's
supermarket in Newtown, Pennsylvania, and its related assets to a
Commission-approved purchaser. The proposed Consent Agreement also
requires Ahold and Safeway to divest all related assets and real
property necessary to ensure the buyer of the divested supermarket will
be able to quickly and fully replicate the competition that would have
been eliminated by the acquisition.
The proposed Consent Agreement has been placed on the public record
for 30 days to solicit comments from interested persons. Comments
received during this period will become part of the public record.
After 30 days, the Commission again will review the proposed Consent
Agreement and comments received, and decide whether it should withdraw
the Consent Agreement, modify it, or make it final without
modification.
On January 4, 2012, Ahold and Safeway executed an agreement whereby
Ahold would acquire 16 of the Genuardi's supermarkets from Safeway. The
Commission's Complaint alleges that the proposed acquisition, if
consummated, would violate Section 7 of the Clayton Act, as amended, 15
U.S.C. 18, and Section 5 of the Federal Trade Commission Act, as
amended, 15 U.S.C. 45, by removing an actual, direct, and substantial
supermarket competitor from the Newtown, Pennsylvania, geographic
market. The proposed Consent Agreement would remedy the alleged
violations by requiring a divestiture that will replace competition
that otherwise would be eliminated in this market as a result of the
acquisition.
II. The Parties
Ahold owns or has an interest in 2,970 supermarkets and specialty
stores in Europe and the United States. Net sales for 2010 were $36.8
billion, which represents a 5.7% increase over 2009. Ahold USA is
organized into four retail divisions: Giant Carlisle, Giant Landover,
Stop & Shop New York Metro, and Stop & Shop New England. Peapod, a
grocery delivery service, also is included within Ahold USA.
Safeway is one of the largest food-and-drug retailers in the United
States. It operates over 1,700 stores across the United States under a
variety of banners, including Vons in southern California and Nevada,
Randalls and Tom Thumb in Texas, Carrs in Alaska, Genuardi's in
suburban Philadelphia, and Safeway throughout the rest of the country.
There were 36 Genuardi's stores operating in Pennsylvania, New York,
and New Jersey when Safeway purchased the chain in February 2001.
Safeway is exiting the Philadelphia metropolitan market by selling or
closing all 24 remaining Genuardi's markets in eastern Pennsylvania
(Bucks, Montgomery, Delaware, and Chester counties), as well as four
stores in New Jersey.
III. Supermarket Competition in Newtown, Pennsylvania
Ahold's proposed acquisition of Genuardi's in Newtown presents
antitrust concerns in the retail sale of groceries. Competition in food
retailing depends on proximity in both retailing format and in
geographic location. Stores with similar formats located nearby each
other provide a greater competitive constraint on each other's pricing
than do stores of different formats or stores located at a greater
[[Page 37676]]
distance. Giant and Genuardi's have stores in the Newtown area, and
they have a very similar format.
Giant and Genuardi's compete as supermarket retailers of grocery
products. Supermarkets are full-line retail grocery stores that sell
thousands of food and non-food products that typical families regularly
consume at home (e.g., fresh meat and seafood, dairy products, frozen
goods, beverages, bakery goods, dry groceries, soaps, detergents, and
health and beauty aids) and offer these products in a variety of sizes
and brands. Supermarkets are large stores with at least 10,000 square
feet of selling space and 30,000 to 60,000 different items, typically
referred to as stock-keeping units or ``SKUs.'' This broad set of
products and services provides a ``one-stop shopping'' experience for
consumers by enabling them to shop in a single store for all of their
food and grocery needs. The ability to offer consumers one-stop
shopping is a critical differentiating factor between supermarkets and
other food retailers.
Other types of retailers that sell food and grocery items compete
less strongly with Giant and Genuardi's. These others include ``mom &
pop'' stores, convenience stores, specialty food stores, ``premium
natural and organic'' markets,\2\ mass merchants, and club stores.
Although these types of retailers provide some level of competition to
supermarkets, they do not have a supermarket's full complement of
products and services, which means that if customers elect to shop at
these retailers, they also must shop at a supermarket in order to
satisfy their weekly grocery needs. Because of this, shoppers at one
supermarket are more likely to respond to a price increase by switching
to another supermarket than to choose a store with a different format,
if both are equally convenient.\3\
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\2\ See FTC v. Whole Foods Mkt., Inc., 533 F.3d 869 (D.C. Cir.
2008).
\3\ Shoppers typically do not view these other food and grocery
retailers as adequate substitutes for supermarkets and would be
unlikely to switch to one of these retailers in response to a small
but significant price increase or ``SSNIP'' by a hypothetical
supermarket monopolist. See U.S. DOJ and FTC Horizontal Merger
Guidelines Sec. 4.1.1 (2010).
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To evaluate the effects of the acquisition on market concentration
levels, we define the product market to be the retail sale of grocery
products in supermarkets, consistent with practice in all but one prior
grocery retailing case settled by consent order.\4\
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\4\ See, e.g., Shaw's/Star Markets, Docket C-3934 (June 28,
1999); Kroger/Fred Meyer, Docket C-3917 (January 10, 2000);
Albertson's/American Stores, Docket C-3986 (June 22, 1999); Ahold/
Giant, Docket C-3861 (April 5, 1999); Albertson's/Buttrey, Docket C-
3838 (December 8, 1998); Jitney-Jungle Stores of America, Inc.,
Docket C-3784 (January 30, 1998). But see Wal-Mart/Supermercados
Amigo, Docket C-4066 (November 21, 2002) (the Commission's complaint
alleged that in Puerto Rico, club stores should be included in a
product market that included supermarkets because club stores in
Puerto Rico enabled consumers to purchase substantially all of their
weekly food and grocery requirements in a single shopping visit).
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Customers shopping at supermarkets are motivated primarily by
convenience and, as a result, competition for supermarkets is local in
nature. Generally, the overwhelming majority of consumers' grocery
shopping occurs at stores located very close to where they live.
Location is a critical component for closeness of competition between
supermarkets. Supermarkets are a differentiated products industry with
location serving as one of the primary drivers of differentiation and
competition. A supermarket tends to be in most direct competition with
those supermarkets located closest to it. Giant and Genuardi's are
located approximately two miles from each other in the Newtown area,
and the supermarkets' primary trade areas overlap significantly with
each other. Acme is the only other supermarket operating in this area.
The next-closest supermarket is located at least twice as far away as
the Newtown supermarkets are to each other.
The relevant geographic market in which to measure concentration
and analyze the competitive implications of Ahold's proposed
acquisition of the Newtown Genuardi's is a roughly three to three-and-
a-half mile circle measured from the center of Newtown and made up of
the U.S. census tracts surrounding this area. Specifically, it consists
of Newtown Township, Newtown Borough, and the portion of Middletown
Township north of the line formed by Bridgetown Pike and Langhorne
Yardley Road in Bucks County, Pennsylvania.
The Newtown, Pennsylvania, market for the sale of retail food and
groceries in supermarkets is already highly concentrated, and would
become significantly more so post-acquisition. The acquisition would
reduce the number of supermarket competitors from three to two,
creating a duopoly between Giant and Acme Markets. Under the Herfindal-
Hirschman Index (``HHI''), which is the standard measure of market
concentration under the 2010 Department of Justice and Federal Trade
Commission Merger Guidelines, an acquisition is presumed to create or
enhance market power or facilitate its exercise if it increases the HHI
by more than 200 points and results in a post-acquisition HHI that
exceeds 2,500 points. Giant's proposed acquisition of the Newtown
Genuardi's creates market concentration levels well in excess of these
thresholds. The post-acquisition HHI is 5000-5017, representing an
increase of between 1221-1373 from pre-acquisition levels.
Staff's investigation and analysis demonstrate that Giant and
Genuardi's are close competitors that compete directly for grocery
shoppers in Newtown. Because a substantial number of consumers in
Newtown consider Giant's and Genuardi's stores to be close substitutes,
a post-acquisition price increase at one (or both) of Giant's stores
would be profitable because the other Giant-owned supermarket would
likely recoup enough of the otherwise lost volume for the price
increase to be profitable. Absent relief, the transaction may also
facilitate tacit or express coordination since Acme would be Giant's
only remaining competitor in Newtown post-acquisition. Given the
transparency of pricing and promotional practices between supermarkets
and the fact that supermarkets ``price check'' competitors in the
ordinary course of business, reducing the number of nearby competitors
from three to two may facilitate collusion between the remaining
supermarket competitors by making coordination easier to establish and
monitor.
New entry is unlikely to deter or counteract the likely
anticompetitive effects of the proposed acquisition. Normally, as here,
it takes two or more years for an entrant to secure a viable location,
obtain the necessary permits and governmental approvals, build its
retail establishment, and open to customers. Moreover, incumbent
supermarkets often oppose entry efforts by competitor supermarkets,
delaying further any potential entry into the relevant market. It is
unlikely that entry sufficient to achieve a significant market impact
would occur in a timely manner.
IV. The Proposed Consent Agreement
The proposed remedy, which requires the divestiture of the
Genuardi's store in Newtown to a Commission-approved purchaser, will be
sufficient to restore fully the competition that otherwise would be
eliminated in the market as a result of the acquisition.
Respondents Ahold and Genuardi's have agreed to divest the Newtown
Genuardi's supermarket to McCaffrey's. McCaffrey's appears to be a
highly suitable purchaser, and is well-positioned to enter the relevant
market and prevent the increase in market concentration and likely
competitive harm that otherwise would have been caused by the
acquisition.
[[Page 37677]]
All of the current McCaffrey's supermarkets are located outside the
relevant geographic area. Its Yardley, Pennsylvania, store is
approximately six miles, and approximately 15 minutes driving time,
from the Genuardi's in Newtown. The Newtown Genuardi's is outside
McCaffrey's primary service area and vice versa.
The proposed Order requires Respondents Ahold and Safeway to divest
the assets of the Genuardi's to McCaffrey's no later than ten days
following Ahold's acquisition of the 16 Genuardi's stores that are
subject to the Asset Purchase Agreement. If McCaffrey's ultimately is
not approved by the Commission to purchase the assets, Respondents must
immediately rescind the divestiture and divest the Newtown Genuardi's
assets to a buyer that receives the Commission's prior approval. The
proposed Order contains additional provisions designed to ensure the
adequacy of the proposed relief. For example, for a period of one year,
the Order prohibits Respondents from interfering with the hiring of or
employment of any employees currently working at the Newtown
Genuardi's. Additionally, for a period of ten years, Ahold is required
to give the Commission prior notice of plans to acquire a supermarket,
or an interest in a supermarket, that has operated or is operating in
Newtown, Pennsylvania.
V. Opportunity for Public Comment
The proposed Consent Agreement has been placed on the public record
for 30 days to solicit comments from interested persons. Comments
received during this period will become part of the public record.
After 30 days, the Commission will again review the proposed Consent
Agreement, as well as the comments received, and will decide whether to
modify the proposed Consent Agreement, withdraw its acceptance of the
proposed Consent Agreement, or issue its final Consent Orders.
The sole purpose of this Analysis is to facilitate public comment
on the proposed Consent Agreement. This Analysis does not constitute an
official interpretation of the proposed Consent Agreement, nor does it
modify its terms in any way.
By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2012-15308 Filed 6-21-12; 8:45 am]
BILLING CODE 6750-01-P
