Koninklijke Ahold N.V. and Delhaize Group NV/SA; Analysis To Aid Public Comment, 51888-51892 [2016-18564]

Download as PDF mstockstill on DSK3G9T082PROD with NOTICES 51888 Federal Register / Vol. 81, No. 151 / Friday, August 5, 2016 / Notices PEEK supply for all of a device maker’s products, lack of access to new types of PEEK developed by Invibio, and the loss of necessary regulatory support. In certain cases, Invibio provided customers with a small price discount or other benefit in exchange for exclusivity. Notably, both Solvay and Evonik offered PEEK at prices significantly below those charged by Invibio, lower even than prices reflecting discounts Invibio offered to secure customer exclusivity. As alleged in the complaint, this strategy worked. Even after Solvay and Evonik’s entry, Invibio still accounted for approximately 90 percent of implant-grade PEEK sales. Invibio’s exclusive dealing policy foreclosed a substantial majority of PEEK sales for which its rivals otherwise could have competed. The evidence shows that Invibio has been able to charge supracompetitive prices to many device makers notwithstanding Solvay and Evonik’s entry. Largely limited to competing for small or start-up device makers that do not have exclusive contracts with Invibio, Solvay and Evonik missed their respective sales targets. Absent the Commission’s enforcement action, Invibio’s conduct would continue to deny Solvay and Evonik the opportunity to contest most sales opportunities. They would be unable to achieve sales volumes sufficient to incentivize continued investment in the business that would yield further innovations in PEEK technology. Importantly, Invibio has failed to identify any procompetitive justification that would offset the harm that its exclusive supply contracts inflicted on competition. In order to safeguard competition, the Commission’s order generally prohibits Invibio from entering into exclusive supply contracts and from preventing current customers from using an alternative source of PEEK in new products. The order also prohibits Invibio from imposing contract terms that would deter a customer from purchasing additional units of PEEK from a rival. In general, Invibio may neither condition price or other sales terms on a customer’s purchase of a specified portion or percentage of its PEEK requirements from Invibio, nor offer volume discounts that are applied retroactively once a customer’s total purchases of Invibio PEEK reach a specified threshold. Invibio may, however, offer volume discounts that are not retroactive. At the same time, we recognize that collaborative research and development efforts involving a PEEK supplier and a device maker present a different set of VerDate Sep<11>2014 17:42 Aug 04, 2016 Jkt 238001 issues, including potential concerns about free riding. Consequently, our order leaves room for limited exclusive arrangements where Invibio and a device maker jointly research and develop new or custom PEEK products or devices. In sum, our order appropriately addresses Invibio’s exclusionary conduct, provides its rivals a meaningful opportunity to compete, and opens the door for price competition, innovation, and more choice for PEEK customers. By direction of the Commission. Donald S. Clark, Secretary. [FR Doc. 2016–18565 Filed 8–4–16; 8:45 am] BILLING CODE 6750–01–P FEDERAL TRADE COMMISSION [File No. 151 0175] Koninklijke Ahold N.V. and Delhaize Group NV/SA; Analysis 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 methods of competition. The attached Analysis to Aid Public Comment describes both the allegations in the 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 August 22, 2016. ADDRESSES: Interested parties may file a comment at https:// ftcpublic.commentworks.com/ftc/ aholddelhaizeconsent online or on paper, by following the instructions in the Request for Comment part of the SUPPLEMENTARY INFORMATION section below. Write ‘‘In the Matter of Koninklijke Ahold N.V. and Delhaize Group NV/SA File No. 151–0175— Consent Agreement’’ on your comment and file your comment online at https:// ftcpublic.commentworks.com/ftc/ aholddelhaizeconsent by following the instructions on the web-based form. If you prefer to file your comment on paper, write ‘‘In the Matter of Koninklijke Ahold N.V. and Delhaize Group NV/SA File No. 151–0175— Consent Agreement’’ on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite CC–5610 (Annex D), Washington, DC 20580, or deliver your SUMMARY: PO 00000 Frm 00049 Fmt 4703 Sfmt 4703 comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC 20024. FOR FURTHER INFORMATION CONTACT: Alexis Gilman (202–326–2579) or Dan Ducore (202–326–2526), Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC 20580. SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, notice is hereby given that the above-captioned consent agreement containing 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 July 22, 2016), on the World Wide Web, at http://www.ftc.gov/ os/actions.shtm. You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before August 22, 2016. Write ‘‘In the Matter of Koninklijke Ahold N.V. and Delhaize Group NV/SA File No. 151– 0175—Consent Agreement’’ 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 http://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 privileged or confidential,’’ as discussed E:\FR\FM\05AUN1.SGM 05AUN1 mstockstill on DSK3G9T082PROD with NOTICES Federal Register / Vol. 81, No. 151 / Friday, August 5, 2016 / Notices 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/ aholddelhaizeconsent by following the instructions on the web-based form. If this Notice appears at http:// www.regulations.gov/#!home, you also may file a comment through that Web site. If you file your comment on paper, write ‘‘In the Matter of Koninklijke Ahold N.V. and Delhaize Group NV/SA File No. 151–0175—Consent Agreement’’ on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC–5610 (Annex D), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC. If possible, submit your paper comment to the Commission by courier or overnight service. Visit the Commission Web site at http://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 August 22, 2016. You can find more information, including routine 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). VerDate Sep<11>2014 17:42 Aug 04, 2016 Jkt 238001 uses permitted by the Privacy Act, in the Commission’s privacy policy, at http://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, subject to final approval, an Agreement Containing Consent Order (‘‘Consent Order’’) from Koninklijke Ahold N.V. (‘‘Ahold’’) and Delhaize Group NV/SA (‘‘Delhaize’’) (collectively, the ‘‘Respondents’’). Pursuant to an Agreement and Plan of Merger dated June 24, 2015, Ahold and Delhaize will combine their businesses through a merger of equals, resulting in a combined entity valued at approximately $28 billion (‘‘the Merger’’). The purpose of the proposed Consent Order is to remedy the anticompetitive effects that otherwise would result from the Merger. Under the terms of the proposed Consent Order, Respondents are required to divest 81 supermarkets and related assets in 46 local geographic markets (collectively, the ‘‘relevant markets’’) in seven states to seven Commission-approved buyers. The divestitures must be completed within a time-period ranging from 60 to 360 days following the date of the Merger. The Commission and Respondents have agreed to an Order to Maintain Assets that requires Respondents to operate and maintain each divestiture store in the normal course of business through the date the store is ultimately divested to a buyer. The proposed Consent Order 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 Order and any comments received, and decide whether it should withdraw the Consent Order, modify the Consent Order, or make the Consent Order final. The Commission’s Complaint alleges that the Merger, 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 in each of the 46 local geographic markets. The elimination of this competition would result in significant competitive harm; specifically, the Merger will allow the merged firm to increase prices above competitive levels, unilaterally or through coordinated interaction among the remaining market participants. PO 00000 Frm 00050 Fmt 4703 Sfmt 4703 51889 Similarly, absent a remedy, there is significant risk that the merged firm may decrease quality and service aspects of its stores below competitive levels. The proposed Consent Order would remedy the alleged violations by requiring divestitures to replace competition that otherwise would be lost in the relevant markets because of the Merger. II. The Respondents Respondent Ahold is a Dutch company that operates in the United States through its principal U.S. subsidiary Ahold U.S.A., Inc. As of June 24, 2015, Ahold operated 760 supermarkets in the United States under the Stop & Shop, Giant, and Martin’s banners. Ahold’s stores are located in Connecticut, Delaware, the District of Columbia, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island, Virginia, and West Virginia. Delhaize is a Belgian company that operates in the United States through its principal U.S. subsidiary Delhaize America, LLC. As of June 24, 2015, Delhaize operated 1,291 supermarkets in the United States under the Food Lion and Hannaford banners, dispersed throughout Delaware, Georgia, Kentucky, Maine, Maryland, Massachusetts, New Hampshire, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Vermont, and West Virginia. III. Retail Sale of Food and Other Grocery Products in Supermarkets The Merger presents substantial antitrust concerns for the retail sale of food and other grocery products in supermarkets. Supermarkets are traditional full-line retail grocery stores that sell food and non-food products that customers regularly consume at home—including, but not limited to, fresh produce and meat, dairy products, frozen foods, beverages, bakery goods, dry groceries, household products, detergents, and health and beauty products. Supermarkets also provide service options that enhance the shopping experience, including deli, butcher, seafood, bakery, and floral counters. This broad set of products and services provides consumers with a ‘‘one-stop shopping’’ experience 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 the critical difference between supermarkets and other food retailers. The relevant product market includes supermarkets within ‘‘hypermarkets’’ such as Walmart Supercenters. E:\FR\FM\05AUN1.SGM 05AUN1 51890 Federal Register / Vol. 81, No. 151 / Friday, August 5, 2016 / Notices mstockstill on DSK3G9T082PROD with NOTICES Hypermarkets also sell an array of products not found in traditional supermarkets. Like conventional supermarkets, however, hypermarkets contain bakeries, delis, dairy, produce, fresh meat, and sufficient product offerings to enable customers to purchase all of their weekly grocery requirements in a single shopping visit. Other types of retailers, such as hard discounters, limited assortment stores, natural and organic markets, ethnic specialty stores, and club stores, also sell food and grocery items. These types of retailers are not in the relevant product market because they offer a more limited range of products and services than supermarkets and because they appeal to a distinct customer type. Shoppers typically do not view these other food and grocery retailers as adequate substitutes for supermarkets.2 Consistent with prior Commission precedent, the Commission has excluded these other types of retailers from the relevant product market.3 The relevant geographic markets in which to analyze the effects of the Merger are areas that range from onetenth of a mile to a ten-mile radius around each of the Respondents’ supermarkets, though the majority of Respondents’ overlapping supermarkets raising concerns are within six miles or less of each other.4 The length of the radius depends on factors such as population density, traffic patterns, and other specific characteristics of each market. Where the Respondents’ 2 That is, supermarket shoppers would be unlikely to switch to one of these other types of retailers in response to a small but significant nontransitory increase in price or ‘‘SSNIP’’ by a hypothetical supermarket monopolist. See U.S. DOJ and FTC Horizontal Merger Guidelines § 4.1.1 (2010). 3 See, e.g., Cerberus Institutional Partners, L.P./ Safeway, Inc., Docket C–4504 (Jul. 2, 2015); Bi-Lo Holdings, LLC/Delhaize America, LLC, Docket C– 4440 (Feb. 25, 2014); AB Acquisition, LLC, Docket C–4424 (Dec. 23, 2013); Koninklijke Ahold N.V./ Safeway Inc., Docket C–4367 (Aug. 17, 2012); Shaw’s/Star Markets, Docket C–3934 (Jun. 28, 1999); Kroger/Fred Meyer, Docket C–3917 (Jan. 10, 2000); Albertson’s/American Stores, Docket C–3986 (Jun. 22, 1999); Ahold/Giant, Docket C–3861 (Apr. 5, 1999); Albertson’s/Buttrey, Docket C–3838 (Dec. 8, 1998); Jitney-Jungle Stores of America, Inc., Docket C–3784 (Jan. 30, 1998). But see Wal-Mart/ Supermercados Amigo, Docket C–4066 (Nov. 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). 4 For purpose of the Complaint and remedial orders, Richmond, Virginia, is considered one geographic market because of the particular facts in this case, including the extensive overlaps between the Respondents’ supermarkets in Richmond and because identifying narrower relevant geographic markets in Richmond would not have changed the analysis. VerDate Sep<11>2014 17:42 Aug 04, 2016 Jkt 238001 supermarkets are located in rural areas, the relevant geographic areas are larger than areas where the Respondents’ supermarkets are located in more densely populated cities. A hypothetical monopolist of the retail sale of food and grocery products in supermarkets in each relevant area could profitably impose a small but significant nontransitory increase in price. The 46 geographic markets in which to analyze the effects of the Merger are local areas in and around: (1) Lewes & Rehoboth Beach, Delaware; (2) Millsboro, Delaware; (3) Millville, Delaware; (4) Accokeek, Maryland; (5) Bowie, Maryland; (6) California, Maryland; (7) Columbia, Maryland; (8) Cumberland & Frostburg, Maryland; (9) Easton, Maryland; (10) Edgewater, Maryland; (11) Gaithersburg, Maryland; (12) Hagerstown (north), Maryland; (13) Hagerstown (south), Maryland; (14) La Plata, Maryland; (15) Lusby, Maryland; (16) Owings Mills, Maryland; (17) Prince Frederick, Maryland; (18) Reisterstown, Maryland; (19) Salisbury, Maryland; (20) Sykesville, Maryland; (21) Upper Marlboro, Maryland; (22) Gardner, Massachusetts; (23) Kingston, Massachusetts; (24) Mansfield & South Easton, Massachusetts; (25) Milford, Massachusetts; (26) Norwell, Massachusetts; (27) Norwood & Walpole, Massachusetts; (28) Quincy, Massachusetts; (29) Saugus, Massachusetts; (30) Mahopac & Carmel, New York; (31) New Paltz & Modena, New York; (32) Poughkeepsie & Lagrangeville, New York; (33) Rhinebeck & Red Hook, New York; (34) Wappingers Falls, New York; (35) Chambersburg, Pennsylvania; (36) Waynesboro, Pennsylvania; (37) York, Pennsylvania; (38) Culpeper, Virginia; (39) Fredericksburg, Virginia; (40) Front Royal, Virginia; (41) Purcellville, Virginia; (42) Richmond, Virginia; (43) Stafford, Virginia; (44) Stephens City, Virginia; (45) Winchester, Virginia; and (46) Martinsburg, West Virginia. Under the 2010 Department of Justice and Federal Trade Commission Horizontal Merger Guidelines, an acquisition that results in an HHI in excess of 2,500 and increases the HHI by more than 200 significantly increases concentration in a highly concentrated market and therefore is presumed anticompetitive. With the exception of one market,5 each of the relevant 5 Based on a calculation giving full weight to a third-party supermarket with a large draw area, the Merger results in a post-Merger HHI that does not meet the threshold for a highly concentrated market in the Norwood/Walpole, Massachusetts, market, even though the change in concentration is more than double the level that raises significant PO 00000 Frm 00051 Fmt 4703 Sfmt 4703 geographic markets identified above meets the Horizontal Merger Guidelines presumption. Based on the market shares of the parties and other market participants, the post-Merger HHI levels in the relevant markets vary from 2,268 to 10,000, and the HHI deltas vary from 243 to 5,000. The relevant markets are also highly concentrated in terms of the number of remaining market participants postMerger. Of the 46 geographic markets, the Merger will result in a merger-tomonopoly in three markets and a merger-to-duopoly in 14 markets. In the remaining markets, the Merger will reduce the number of market participants from four to three in 18 markets, from five to four in ten markets, and from seven to six in one market.6 The anticompetitive implications of such significant increases in market concentration are reinforced by substantial evidence demonstrating that Ahold and Delhaize are close and vigorous competitors in terms of price, format, service, product offerings, promotional activity, and location in each of the relevant geographic markets. Absent relief, the Merger would eliminate significant head-to-head competition between Ahold and Delhaize and would increase the ability and incentive of Ahold to raise prices unilaterally post-Merger. The Merger would also decrease incentives to compete on non-price factors, such as service levels, convenience, and quality. Lastly, the high levels of concentration also increase the likelihood of competitive harm through coordinated interaction. New entry or expansion in the relevant markets is unlikely to deter or counteract the anticompetitive effects of the Merger. Even if a prospective entrant existed, the entrant must secure an economically-viable location, obtain the necessary permits and governmental approvals, build its retail establishment or renovate an existing building, and open to customers before it could begin operating and serve as a relevant competitive constraint. As a result, new entry sufficient to achieve a significant market impact and act as a competitive constraint is unlikely to occur in a timely manner. competitive concerns. Under calculations giving less than full weight to that supermarket, the Merger results in a highly concentrated market that meets the presumption for enhanced market power. Ultimately, an analysis of all the evidence indicates that the Merger is likely to substantially lessen competition in this market. 6 See Exhibit A. E:\FR\FM\05AUN1.SGM 05AUN1 mstockstill on DSK3G9T082PROD with NOTICES Federal Register / Vol. 81, No. 151 / Friday, August 5, 2016 / Notices IV. The Proposed Consent Order The proposed remedy, which requires the divestiture of either Ahold or Delhaize supermarkets in each relevant market to seven Commission-approved upfront buyers (the ‘‘proposed buyers’’) will restore fully the competition that otherwise would be eliminated in these markets as a result of the Merger. Specifically, Respondents have agreed to divest: • 1 store in Maryland to New Albertson’s Inc. (‘‘Albertsons’’); • 7 stores in Massachusetts to Big Y Foods, Inc. (‘‘Big Y’’); • 10 stores in Virginia to Publix North Carolina, LP (‘‘Publix’’); • 1 store in Pennsylvania to Saubel’s Market, Inc. (‘‘Saubels’’); • 18 stores in Maryland, Pennsylvania, Virginia, and West Virginia to Shop ‘N Save East, LLC (‘‘Supervalu’’); • 6 stores in Massachusetts and New York to Tops Markets, LLC (‘‘Tops’’); and • 38 stores in Delaware, Maryland, and Virginia to Weis Markets Inc. (‘‘Weis’’). The proposed buyers appear to be highly suitable purchasers that are well positioned to enter the relevant geographic markets through the divested stores and prevent the increase in market concentration and likely competitive harm that otherwise would have resulted from the Merger. The supermarkets currently owned by the proposed buyers are all located outside the relevant geographic markets in which they are purchasing divested stores. Albertsons is a large supermarket chain operating over 2,200 stores around the country. Albertsons will purchase the Salisbury, Maryland, store. Big Y is a regional supermarket operator with 61 stores in Connecticut and Massachusetts. Big Y will purchase seven divested stores in Massachusetts. Publix is a large supermarket chain with approximately 1,100 supermarkets in Alabama, Florida, Georgia, North Carolina, South Carolina, and Tennessee. Publix will purchase ten divested stores in Richmond, Virginia. Saubels is a small supermarket chain with three stores in Pennsylvania and Maryland. Saubels will purchase the York, Pennsylvania, store. Tops operates 165 supermarkets in New York, Pennsylvania, and Vermont. Tops will purchase five divested stores in New York and one divested store in Massachusetts. Supervalu is a wholesale VerDate Sep<11>2014 17:42 Aug 04, 2016 Jkt 238001 food distributor that operates corporateowned stores. Supervalu will purchase 18 divested stores in Maryland, Pennsylvania, Virginia, and West Virginia. Because Supervalu has in the past sold or assigned its rights in corporate-owned stores to independent operators, the Order requires Supervalu to seek prior approval for any such transfer of the divested stores for a period of three years. Weis is a regional supermarket operating 163 stores in Maryland, New Jersey, New York, Pennsylvania, and West Virginia. Weis will purchase 38 divested stores in Delaware, Maryland, and Virginia. The proposed Consent Order requires Respondents to divest: (a) The Salisbury, Maryland, asset to Albertsons within 60 days of the date of Merger; (b) the Massachusetts (except Gardner) assets to Big Y within 90 days from the date of the Merger; (c) the Richmond, Virginia, assets to Publix in three groupings (the first within 180 days of the date of Merger, the second within 240 days, and the third within 360 days); (d) the York, Pennsylvania, asset to Saubels within 60 days of the date of Merger; (e) the Chambersburg and Waynesboro, Pennsylvania, assets, the Hagerstown, Maryland, assets, certain of the Virginia assets, and the West Virginia assets to Supervalu within 105 days of the date of the Merger; (f) the New York and Gardner, Massachusetts, assets to Tops within 60 days of the date of the Merger; and (g) the Delaware, Maryland (except Hagerstown and Salisbury), and certain of the Virginia assets to Weis in two phases (the first within 90 days of the date of the Merger, and the second within 230 days). The variation in divestiture date deadlines is a function of the number of stores being acquired by each proposed buyer, as those acquiring a larger number of stores have requested and need a longer acquisition and transition period than those acquiring a smaller number of stores. In the case of Publix, the divestiture schedule is extended in order to give Publix sufficient time prior to the divestitures to secure permits and approvals needed for remodeling and construction work for the store locations it is acquiring. Publix is planning to make significant improvements to the acquired stores, including rebuilding several of them, in order to conform them to a typical Publix store. In addition, the extended divestiture schedule will reduce the time periods these stores will need to be closed before being reopened as Publix stores. PO 00000 Frm 00052 Fmt 4703 Sfmt 4703 51891 The proposed Consent Order and the Order to Maintain Assets require Respondents to continue operating and maintaining the divestiture stores in the normal course of business until the date that each store is sold to the proposed buyer. If, at the time before the proposed Consent Order is made final, the Commission determines that any of the proposed buyers are not acceptable buyers, Respondents must rescind the divestiture(s) and divest the assets to a different buyer that receives the Commission’s prior approval.7 The proposed Consent Order contains additional provisions designed to ensure the adequacy of the proposed relief. For example, Respondents have agreed to an Order to Maintain Assets that will be issued at the time the proposed Consent Order is accepted for public comment. The Order to Maintain Assets requires Ahold and Delhaize to operate and maintain each divestiture store in the normal course of business through the date the store is ultimately divested to a buyer. Since the divestiture schedule with certain stores runs for an extended period of time (potentially up to 360 days following the Merger date), the proposed Consent Order appoints Brad Wise 8 as a Monitor to oversee the Respondents’ compliance with the requirements of the proposed Consent Order and Order to Maintain Assets. Brad Wise has the experience and skills to be an effective Monitor, no identifiable conflicts, and sufficient time to dedicate to this matter through its conclusion. Lastly, for a period of ten years, Ahold is required to give the Commission prior notice of plans to acquire any interest in a supermarket that has operated or is operating in the counties included in the relevant markets. The sole purpose of this Analysis is to facilitate public comment on the proposed Consent Order. This Analysis does not constitute an official interpretation of the proposed Consent Order, nor does it modify its terms in any way. 7 In the case of the Richmond, Virginia, the Consent Order also provides the Commission the option to add six additional Richmond-area Ahold stores to the Richmond divestiture package, as may be needed, to secure an approvable alternative buyer for the Richmond assets. 8 Mr. Wise is a retired, long-time industry executive, having most recently served as President of Hannaford until his retirement in 2015. Mr. Wise currently works at pro-voke, a business consulting firm. E:\FR\FM\05AUN1.SGM 05AUN1 51892 Federal Register / Vol. 81, No. 151 / Friday, August 5, 2016 / Notices EXHIBIT A Area number City State 1 .............. 2 .............. 3 .............. 4 .............. 5 .............. 6 .............. 7 .............. 8 .............. 9 .............. 10 ............ 11 ............ 12 ............ 13 ............ 14 ............ 15 ............ 16 ............ 17 ............ 18 ............ 19 ............ 20 ............ 21 ............ 22 ............ 23 ............ 24 ............ 25 ............ 26 ............ 27 ............ 28 ............ 29 ............ 30 ............ 31 ............ DE ..... DE ..... DE ..... MA .... MA .... MA .... MA .... MA .... MA .... MA .... MA .... MD .... MD .... MD .... MD .... MD .... MD .... MD .... MD .... MD .... MD .... MD .... MD .... MD .... MD .... MD .... MD .... MD .... MD .... NY ..... NY ..... 4 3 4 4 5 4 5 4 7 4 5 2 4 4 5 3 4 3 5 4 4 3 2 4 3 4 3 5 3 5 3 ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... ....... 2,947 3,794 4,065 2,517 3,140 2,834 2,298 4,052 2,025 3,854 2,140 5,430 3,288 3,043 3,093 4,032 2,803 3,920 4,203 3,910 4,043 3,935 5,108 3,325 3,734 3,423 3,976 3,012 3,645 2,940 3,690 5,369 6,440 5,762 3,723 4,459 4,307 2,780 5,840 2,268 5,092 2,819 10,000 3,750 4,121 3,679 5,157 3,578 5,261 5,193 4,525 4,323 5,007 10,000 4,017 5,242 4,169 5,029 3,732 5,328 4,352 6,601 2,421 2,646 1,697 1,207 1,318 1,472 482 1,789 243 1,239 679 4,570 462 1078 586 1,125 775 1,341 989 615 281 1,072 4,892 692 1,508 746 1,053 720 1,683 1,412 2,911 D2565 & D488 D960 D1321 A434 D8008 D8382 D8021 D8020 D8022 D8018 D8286 D1356 D1387 D784, D1210 & D2515 D2598 & D1529 D1549 & D1187 D1289 D1315 D1345 & D1477 D626, D1683 & D1180 D1147 D1168 D1443 & D2606 D2535 D1526 D786 A351 D1324 D1535 D8325 A515 NY ..... 4 to 3 ....... 3,269 5,786 2,517 D8368 ............ ............ ............ ............ ............ ............ ............ Lewes & Rehoboth Beach .... Millsboro ............................... Millville .................................. Gardner ................................. Kingston ................................ Mansfield & South Easton .... Milford ................................... Norwell .................................. Norwood & Walpole .............. Quincy ................................... Saugus .................................. Accokeek .............................. Bowie .................................... California ............................... Columbia ............................... Cumberland & Frostburg ...... Easton ................................... Edgewater ............................. Gaithersburg ......................... Hagerstown (South) .............. Hagerstown (North) .............. La Plata ................................ Lusby .................................... Owings Mills ......................... Prince Frederick ................... Reisterstown ......................... Salisbury ............................... Sykesville .............................. Upper Marlboro ..................... Mahopac & Carmel ............... New Paltz, Modena & Highland. Poughkeepsie & Lagrangeville. Rhinebeck & Red Hook ........ Wappingers Falls .................. Chambersburg ...................... Waynesboro .......................... York ...................................... Culpepper ............................. Fredericksburg ...................... NY NY PA PA PA VA VA 2 3 5 3 4 4 5 ....... ....... ....... ....... ....... ....... ....... 5,023 2,646 3,277 5,030 3,710 3,329 2,696 10,000 4,256 4,232 5,537 4,135 4,371 3,560 4,977 1,610 955 506 424 1,042 864 40 ............ 41 ............ 42 ............ Front Royal ........................... Purcellville ............................. Richmond .............................. VA ..... VA ..... VA ..... 3 to 2 ....... 3 to 2 ....... 5 to 4 ....... 3,638 3,679 2,198 5,095 5,321 2,857 1,456 1,642 659 43 ............ 44 ............ 45 ............ Stafford ................................. Stephens City ....................... Winchester ............................ VA ..... VA ..... VA ..... 4 to 3 ....... 3 to 2 ....... 3 to 2 ....... 3,333 4,045 3,662 4,038 5,018 5,094 705 973 1,433 46 ............ Martinsburg ........................... WV .... 4 to 3 ....... 2,759 3,568 809 A536 A598 D1527 & D994 D1663 D1241 D250 & D1567 D358, D419, D450, D1043, D1177, D1235, D1243, D1579 & D2583 D1059 D745 A6421, A6434, A6433, A6498, A6429, A6439, A6435, A6499, A6438 & A6494 D578 & D1166 D1489 D366, D362, D733, D1281, D2668 & D1164 D1189 & D2568 32 ............ 33 34 35 36 37 38 39 By direction of the Commission. Donald S. Clark, Secretary. [FR Doc. 2016–18564 Filed 8–4–16; 8:45 am] mstockstill on DSK3G9T082PROD with NOTICES BILLING CODE 6750–01–P ..... ..... ..... ..... ..... ..... ..... Merger result to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to to 3 2 3 3 4 3 4 3 6 3 4 1 3 3 4 2 3 2 4 3 3 2 1 3 2 3 2 4 2 4 2 to to to to to to to 1 2 4 2 3 3 4 HHI (pre) HHI (post) Delta FEDERAL TRADE COMMISSION [File No. 151 0196] Teva Pharmaceutical Industries Ltd. and Allergan plc; Analysis 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 methods of competition. The attached Analysis to SUMMARY: VerDate Sep<11>2014 17:42 Aug 04, 2016 Jkt 238001 PO 00000 Frm 00053 Fmt 4703 Sfmt 4703 Divested store(s) Aid Public Comment describes both the allegations in the complaint and the terms of the consent orders—embodied in the consent agreement—that would settle these allegations. DATES: Comments must be received on or before August 29, 2016. ADDRESSES: Interested parties may file a comment at https:// ftcpublic.commentworks.com/ftc/ tevaallerganconsent online or on paper, by following the instructions in the Request for Comment part of the SUPPLEMENTARY INFORMATION section E:\FR\FM\05AUN1.SGM 05AUN1

Agencies

[Federal Register Volume 81, Number 151 (Friday, August 5, 2016)]
[Notices]
[Pages 51888-51892]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-18564]


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FEDERAL TRADE COMMISSION

[File No. 151 0175]


Koninklijke Ahold N.V. and Delhaize Group NV/SA; Analysis To Aid 
Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair methods of competition. 
The attached Analysis to Aid Public Comment describes both the 
allegations in the 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 August 22, 2016.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/aholddelhaizeconsent online or on paper, 
by following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Write ``In the Matter of 
Koninklijke Ahold N.V. and Delhaize Group NV/SA File No. 151-0175--
Consent Agreement'' on your comment and file your comment online at 
https://ftcpublic.commentworks.com/ftc/aholddelhaizeconsent by 
following the instructions on the web-based form. If you prefer to file 
your comment on paper, write ``In the Matter of Koninklijke Ahold N.V. 
and Delhaize Group NV/SA File No. 151-0175--Consent Agreement'' on your 
comment and on the envelope, and mail your comment to the following 
address: Federal Trade Commission, Office of the Secretary, 600 
Pennsylvania Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580, 
or deliver your comment to the following address: Federal Trade 
Commission, Office of the Secretary, Constitution Center, 400 7th 
Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Alexis Gilman (202-326-2579) or Dan 
Ducore (202-326-2526), Bureau of Competition, 600 Pennsylvania Avenue 
NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreement 
containing 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 July 22, 2016), on the World Wide Web, at 
http://www.ftc.gov/os/actions.shtm.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before August 22, 2016. 
Write ``In the Matter of Koninklijke Ahold N.V. and Delhaize Group NV/
SA File No. 151-0175--Consent Agreement'' 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 http://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 privileged or confidential,'' as discussed

[[Page 51889]]

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).
---------------------------------------------------------------------------

    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/aholddelhaizeconsent by following the instructions on the web-based 
form. If this Notice appears at http://www.regulations.gov/#!home, you 
also may file a comment through that Web site.
    If you file your comment on paper, write ``In the Matter of 
Koninklijke Ahold N.V. and Delhaize Group NV/SA File No. 151-0175--
Consent Agreement'' on your comment and on the envelope, and mail your 
comment to the following address: Federal Trade Commission, Office of 
the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex D), 
Washington, DC 20580, or deliver your comment to the following address: 
Federal Trade Commission, Office of the Secretary, Constitution Center, 
400 7th Street SW., 5th Floor, Suite 5610 (Annex D), Washington, DC. If 
possible, submit your paper comment to the Commission by courier or 
overnight service.
    Visit the Commission Web site at http://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 August 22, 2016. You can find more 
information, including routine uses permitted by the Privacy Act, in 
the Commission's privacy policy, at http://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, subject to final approval, an Agreement Containing 
Consent Order (``Consent Order'') from Koninklijke Ahold N.V. 
(``Ahold'') and Delhaize Group NV/SA (``Delhaize'') (collectively, the 
``Respondents''). Pursuant to an Agreement and Plan of Merger dated 
June 24, 2015, Ahold and Delhaize will combine their businesses through 
a merger of equals, resulting in a combined entity valued at 
approximately $28 billion (``the Merger''). The purpose of the proposed 
Consent Order is to remedy the anticompetitive effects that otherwise 
would result from the Merger. Under the terms of the proposed Consent 
Order, Respondents are required to divest 81 supermarkets and related 
assets in 46 local geographic markets (collectively, the ``relevant 
markets'') in seven states to seven Commission-approved buyers. The 
divestitures must be completed within a time-period ranging from 60 to 
360 days following the date of the Merger. The Commission and 
Respondents have agreed to an Order to Maintain Assets that requires 
Respondents to operate and maintain each divestiture store in the 
normal course of business through the date the store is ultimately 
divested to a buyer.
    The proposed Consent Order 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 Order and 
any comments received, and decide whether it should withdraw the 
Consent Order, modify the Consent Order, or make the Consent Order 
final.
    The Commission's Complaint alleges that the Merger, 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 in each of the 46 local geographic markets. The elimination 
of this competition would result in significant competitive harm; 
specifically, the Merger will allow the merged firm to increase prices 
above competitive levels, unilaterally or through coordinated 
interaction among the remaining market participants. Similarly, absent 
a remedy, there is significant risk that the merged firm may decrease 
quality and service aspects of its stores below competitive levels. The 
proposed Consent Order would remedy the alleged violations by requiring 
divestitures to replace competition that otherwise would be lost in the 
relevant markets because of the Merger.

II. The Respondents

    Respondent Ahold is a Dutch company that operates in the United 
States through its principal U.S. subsidiary Ahold U.S.A., Inc. As of 
June 24, 2015, Ahold operated 760 supermarkets in the United States 
under the Stop & Shop, Giant, and Martin's banners. Ahold's stores are 
located in Connecticut, Delaware, the District of Columbia, Maryland, 
Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island, 
Virginia, and West Virginia.
    Delhaize is a Belgian company that operates in the United States 
through its principal U.S. subsidiary Delhaize America, LLC. As of June 
24, 2015, Delhaize operated 1,291 supermarkets in the United States 
under the Food Lion and Hannaford banners, dispersed throughout 
Delaware, Georgia, Kentucky, Maine, Maryland, Massachusetts, New 
Hampshire, New York, North Carolina, Pennsylvania, South Carolina, 
Tennessee, Vermont, and West Virginia.

III. Retail Sale of Food and Other Grocery Products in Supermarkets

    The Merger presents substantial antitrust concerns for the retail 
sale of food and other grocery products in supermarkets. Supermarkets 
are traditional full-line retail grocery stores that sell food and non-
food products that customers regularly consume at home--including, but 
not limited to, fresh produce and meat, dairy products, frozen foods, 
beverages, bakery goods, dry groceries, household products, detergents, 
and health and beauty products. Supermarkets also provide service 
options that enhance the shopping experience, including deli, butcher, 
seafood, bakery, and floral counters. This broad set of products and 
services provides consumers with a ``one-stop shopping'' experience 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 the 
critical difference between supermarkets and other food retailers.
    The relevant product market includes supermarkets within 
``hypermarkets'' such as Walmart Supercenters.

[[Page 51890]]

Hypermarkets also sell an array of products not found in traditional 
supermarkets. Like conventional supermarkets, however, hypermarkets 
contain bakeries, delis, dairy, produce, fresh meat, and sufficient 
product offerings to enable customers to purchase all of their weekly 
grocery requirements in a single shopping visit.
    Other types of retailers, such as hard discounters, limited 
assortment stores, natural and organic markets, ethnic specialty 
stores, and club stores, also sell food and grocery items. These types 
of retailers are not in the relevant product market because they offer 
a more limited range of products and services than supermarkets and 
because they appeal to a distinct customer type. Shoppers typically do 
not view these other food and grocery retailers as adequate substitutes 
for supermarkets.\2\ Consistent with prior Commission precedent, the 
Commission has excluded these other types of retailers from the 
relevant product market.\3\
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    \2\ That is, supermarket shoppers would be unlikely to switch to 
one of these other types of retailers in response to a small but 
significant nontransitory increase in price or ``SSNIP'' by a 
hypothetical supermarket monopolist. See U.S. DOJ and FTC Horizontal 
Merger Guidelines Sec.  4.1.1 (2010).
    \3\ See, e.g., Cerberus Institutional Partners, L.P./Safeway, 
Inc., Docket C-4504 (Jul. 2, 2015); Bi-Lo Holdings, LLC/Delhaize 
America, LLC, Docket C-4440 (Feb. 25, 2014); AB Acquisition, LLC, 
Docket C-4424 (Dec. 23, 2013); Koninklijke Ahold N.V./Safeway Inc., 
Docket C-4367 (Aug. 17, 2012); Shaw's/Star Markets, Docket C-3934 
(Jun. 28, 1999); Kroger/Fred Meyer, Docket C-3917 (Jan. 10, 2000); 
Albertson's/American Stores, Docket C-3986 (Jun. 22, 1999); Ahold/
Giant, Docket C-3861 (Apr. 5, 1999); Albertson's/Buttrey, Docket C-
3838 (Dec. 8, 1998); Jitney-Jungle Stores of America, Inc., Docket 
C-3784 (Jan. 30, 1998). But see Wal-Mart/Supermercados Amigo, Docket 
C-4066 (Nov. 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 relevant geographic markets in which to analyze the effects of 
the Merger are areas that range from one-tenth of a mile to a ten-mile 
radius around each of the Respondents' supermarkets, though the 
majority of Respondents' overlapping supermarkets raising concerns are 
within six miles or less of each other.\4\ The length of the radius 
depends on factors such as population density, traffic patterns, and 
other specific characteristics of each market. Where the Respondents' 
supermarkets are located in rural areas, the relevant geographic areas 
are larger than areas where the Respondents' supermarkets are located 
in more densely populated cities. A hypothetical monopolist of the 
retail sale of food and grocery products in supermarkets in each 
relevant area could profitably impose a small but significant 
nontransitory increase in price.
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    \4\ For purpose of the Complaint and remedial orders, Richmond, 
Virginia, is considered one geographic market because of the 
particular facts in this case, including the extensive overlaps 
between the Respondents' supermarkets in Richmond and because 
identifying narrower relevant geographic markets in Richmond would 
not have changed the analysis.
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    The 46 geographic markets in which to analyze the effects of the 
Merger are local areas in and around:
    (1) Lewes & Rehoboth Beach, Delaware; (2) Millsboro, Delaware; (3) 
Millville, Delaware; (4) Accokeek, Maryland; (5) Bowie, Maryland; (6) 
California, Maryland; (7) Columbia, Maryland; (8) Cumberland & 
Frostburg, Maryland; (9) Easton, Maryland; (10) Edgewater, Maryland; 
(11) Gaithersburg, Maryland; (12) Hagerstown (north), Maryland; (13) 
Hagerstown (south), Maryland; (14) La Plata, Maryland; (15) Lusby, 
Maryland; (16) Owings Mills, Maryland; (17) Prince Frederick, Maryland; 
(18) Reisterstown, Maryland; (19) Salisbury, Maryland; (20) Sykesville, 
Maryland; (21) Upper Marlboro, Maryland; (22) Gardner, Massachusetts; 
(23) Kingston, Massachusetts; (24) Mansfield & South Easton, 
Massachusetts; (25) Milford, Massachusetts; (26) Norwell, 
Massachusetts; (27) Norwood & Walpole, Massachusetts; (28) Quincy, 
Massachusetts; (29) Saugus, Massachusetts; (30) Mahopac & Carmel, New 
York; (31) New Paltz & Modena, New York; (32) Poughkeepsie & 
Lagrangeville, New York; (33) Rhinebeck & Red Hook, New York; (34) 
Wappingers Falls, New York; (35) Chambersburg, Pennsylvania; (36) 
Waynesboro, Pennsylvania; (37) York, Pennsylvania; (38) Culpeper, 
Virginia; (39) Fredericksburg, Virginia; (40) Front Royal, Virginia; 
(41) Purcellville, Virginia; (42) Richmond, Virginia; (43) Stafford, 
Virginia; (44) Stephens City, Virginia; (45) Winchester, Virginia; and 
(46) Martinsburg, West Virginia.
    Under the 2010 Department of Justice and Federal Trade Commission 
Horizontal Merger Guidelines, an acquisition that results in an HHI in 
excess of 2,500 and increases the HHI by more than 200 significantly 
increases concentration in a highly concentrated market and therefore 
is presumed anticompetitive. With the exception of one market,\5\ each 
of the relevant geographic markets identified above meets the 
Horizontal Merger Guidelines presumption. Based on the market shares of 
the parties and other market participants, the post-Merger HHI levels 
in the relevant markets vary from 2,268 to 10,000, and the HHI deltas 
vary from 243 to 5,000.
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    \5\ Based on a calculation giving full weight to a third-party 
supermarket with a large draw area, the Merger results in a post-
Merger HHI that does not meet the threshold for a highly 
concentrated market in the Norwood/Walpole, Massachusetts, market, 
even though the change in concentration is more than double the 
level that raises significant competitive concerns. Under 
calculations giving less than full weight to that supermarket, the 
Merger results in a highly concentrated market that meets the 
presumption for enhanced market power. Ultimately, an analysis of 
all the evidence indicates that the Merger is likely to 
substantially lessen competition in this market.
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    The relevant markets are also highly concentrated in terms of the 
number of remaining market participants post-Merger. Of the 46 
geographic markets, the Merger will result in a merger-to-monopoly in 
three markets and a merger-to-duopoly in 14 markets. In the remaining 
markets, the Merger will reduce the number of market participants from 
four to three in 18 markets, from five to four in ten markets, and from 
seven to six in one market.\6\
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    \6\ See Exhibit A.
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    The anticompetitive implications of such significant increases in 
market concentration are reinforced by substantial evidence 
demonstrating that Ahold and Delhaize are close and vigorous 
competitors in terms of price, format, service, product offerings, 
promotional activity, and location in each of the relevant geographic 
markets. Absent relief, the Merger would eliminate significant head-to-
head competition between Ahold and Delhaize and would increase the 
ability and incentive of Ahold to raise prices unilaterally post-
Merger. The Merger would also decrease incentives to compete on non-
price factors, such as service levels, convenience, and quality. 
Lastly, the high levels of concentration also increase the likelihood 
of competitive harm through coordinated interaction.
    New entry or expansion in the relevant markets is unlikely to deter 
or counteract the anticompetitive effects of the Merger. Even if a 
prospective entrant existed, the entrant must secure an economically-
viable location, obtain the necessary permits and governmental 
approvals, build its retail establishment or renovate an existing 
building, and open to customers before it could begin operating and 
serve as a relevant competitive constraint. As a result, new entry 
sufficient to achieve a significant market impact and act as a 
competitive constraint is unlikely to occur in a timely manner.

[[Page 51891]]

IV. The Proposed Consent Order

    The proposed remedy, which requires the divestiture of either Ahold 
or Delhaize supermarkets in each relevant market to seven Commission-
approved upfront buyers (the ``proposed buyers'') will restore fully 
the competition that otherwise would be eliminated in these markets as 
a result of the Merger. Specifically, Respondents have agreed to 
divest:
     1 store in Maryland to New Albertson's Inc. 
(``Albertsons'');
     7 stores in Massachusetts to Big Y Foods, Inc. (``Big 
Y'');
     10 stores in Virginia to Publix North Carolina, LP 
(``Publix'');
     1 store in Pennsylvania to Saubel's Market, Inc. 
(``Saubels'');
     18 stores in Maryland, Pennsylvania, Virginia, and West 
Virginia to Shop `N Save East, LLC (``Supervalu'');
     6 stores in Massachusetts and New York to Tops Markets, 
LLC (``Tops''); and
     38 stores in Delaware, Maryland, and Virginia to Weis 
Markets Inc. (``Weis'').
    The proposed buyers appear to be highly suitable purchasers that 
are well positioned to enter the relevant geographic markets through 
the divested stores and prevent the increase in market concentration 
and likely competitive harm that otherwise would have resulted from the 
Merger. The supermarkets currently owned by the proposed buyers are all 
located outside the relevant geographic markets in which they are 
purchasing divested stores.
    Albertsons is a large supermarket chain operating over 2,200 stores 
around the country. Albertsons will purchase the Salisbury, Maryland, 
store. Big Y is a regional supermarket operator with 61 stores in 
Connecticut and Massachusetts. Big Y will purchase seven divested 
stores in Massachusetts. Publix is a large supermarket chain with 
approximately 1,100 supermarkets in Alabama, Florida, Georgia, North 
Carolina, South Carolina, and Tennessee. Publix will purchase ten 
divested stores in Richmond, Virginia. Saubels is a small supermarket 
chain with three stores in Pennsylvania and Maryland. Saubels will 
purchase the York, Pennsylvania, store. Tops operates 165 supermarkets 
in New York, Pennsylvania, and Vermont. Tops will purchase five 
divested stores in New York and one divested store in Massachusetts. 
Supervalu is a wholesale food distributor that operates corporate-owned 
stores. Supervalu will purchase 18 divested stores in Maryland, 
Pennsylvania, Virginia, and West Virginia. Because Supervalu has in the 
past sold or assigned its rights in corporate-owned stores to 
independent operators, the Order requires Supervalu to seek prior 
approval for any such transfer of the divested stores for a period of 
three years. Weis is a regional supermarket operating 163 stores in 
Maryland, New Jersey, New York, Pennsylvania, and West Virginia. Weis 
will purchase 38 divested stores in Delaware, Maryland, and Virginia.
    The proposed Consent Order requires Respondents to divest: (a) The 
Salisbury, Maryland, asset to Albertsons within 60 days of the date of 
Merger; (b) the Massachusetts (except Gardner) assets to Big Y within 
90 days from the date of the Merger; (c) the Richmond, Virginia, assets 
to Publix in three groupings (the first within 180 days of the date of 
Merger, the second within 240 days, and the third within 360 days); (d) 
the York, Pennsylvania, asset to Saubels within 60 days of the date of 
Merger; (e) the Chambersburg and Waynesboro, Pennsylvania, assets, the 
Hagerstown, Maryland, assets, certain of the Virginia assets, and the 
West Virginia assets to Supervalu within 105 days of the date of the 
Merger; (f) the New York and Gardner, Massachusetts, assets to Tops 
within 60 days of the date of the Merger; and (g) the Delaware, 
Maryland (except Hagerstown and Salisbury), and certain of the Virginia 
assets to Weis in two phases (the first within 90 days of the date of 
the Merger, and the second within 230 days).
    The variation in divestiture date deadlines is a function of the 
number of stores being acquired by each proposed buyer, as those 
acquiring a larger number of stores have requested and need a longer 
acquisition and transition period than those acquiring a smaller number 
of stores. In the case of Publix, the divestiture schedule is extended 
in order to give Publix sufficient time prior to the divestitures to 
secure permits and approvals needed for remodeling and construction 
work for the store locations it is acquiring. Publix is planning to 
make significant improvements to the acquired stores, including 
rebuilding several of them, in order to conform them to a typical 
Publix store. In addition, the extended divestiture schedule will 
reduce the time periods these stores will need to be closed before 
being reopened as Publix stores. The proposed Consent Order and the 
Order to Maintain Assets require Respondents to continue operating and 
maintaining the divestiture stores in the normal course of business 
until the date that each store is sold to the proposed buyer. If, at 
the time before the proposed Consent Order is made final, the 
Commission determines that any of the proposed buyers are not 
acceptable buyers, Respondents must rescind the divestiture(s) and 
divest the assets to a different buyer that receives the Commission's 
prior approval.\7\
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    \7\ In the case of the Richmond, Virginia, the Consent Order 
also provides the Commission the option to add six additional 
Richmond-area Ahold stores to the Richmond divestiture package, as 
may be needed, to secure an approvable alternative buyer for the 
Richmond assets.
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    The proposed Consent Order contains additional provisions designed 
to ensure the adequacy of the proposed relief. For example, Respondents 
have agreed to an Order to Maintain Assets that will be issued at the 
time the proposed Consent Order is accepted for public comment. The 
Order to Maintain Assets requires Ahold and Delhaize to operate and 
maintain each divestiture store in the normal course of business 
through the date the store is ultimately divested to a buyer. Since the 
divestiture schedule with certain stores runs for an extended period of 
time (potentially up to 360 days following the Merger date), the 
proposed Consent Order appoints Brad Wise \8\ as a Monitor to oversee 
the Respondents' compliance with the requirements of the proposed 
Consent Order and Order to Maintain Assets. Brad Wise has the 
experience and skills to be an effective Monitor, no identifiable 
conflicts, and sufficient time to dedicate to this matter through its 
conclusion. Lastly, for a period of ten years, Ahold is required to 
give the Commission prior notice of plans to acquire any interest in a 
supermarket that has operated or is operating in the counties included 
in the relevant markets.
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    \8\ Mr. Wise is a retired, long-time industry executive, having 
most recently served as President of Hannaford until his retirement 
in 2015. Mr. Wise currently works at pro-voke, a business consulting 
firm.
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    The sole purpose of this Analysis is to facilitate public comment 
on the proposed Consent Order. This Analysis does not constitute an 
official interpretation of the proposed Consent Order, nor does it 
modify its terms in any way.

[[Page 51892]]



                                                                        Exhibit A
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                                                                                          HHI        HHI
  Area  number               City                   State            Merger result       (pre)      (post)     Delta            Divested store(s)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...............  Lewes & Rehoboth Beach...  DE.................  4 to 3.............      2,947      5,369      2,421  D2565 & D488
2...............  Millsboro................  DE.................  3 to 2.............      3,794      6,440      2,646  D960
3...............  Millville................  DE.................  4 to 3.............      4,065      5,762      1,697  D1321
4...............  Gardner..................  MA.................  4 to 3.............      2,517      3,723      1,207  A434
5...............  Kingston.................  MA.................  5 to 4.............      3,140      4,459      1,318  D8008
6...............  Mansfield & South Easton.  MA.................  4 to 3.............      2,834      4,307      1,472  D8382
7...............  Milford..................  MA.................  5 to 4.............      2,298      2,780        482  D8021
8...............  Norwell..................  MA.................  4 to 3.............      4,052      5,840      1,789  D8020
9...............  Norwood & Walpole........  MA.................  7 to 6.............      2,025      2,268        243  D8022
10..............  Quincy...................  MA.................  4 to 3.............      3,854      5,092      1,239  D8018
11..............  Saugus...................  MA.................  5 to 4.............      2,140      2,819        679  D8286
12..............  Accokeek.................  MD.................  2 to 1.............      5,430     10,000      4,570  D1356
13..............  Bowie....................  MD.................  4 to 3.............      3,288      3,750        462  D1387
14..............  California...............  MD.................  4 to 3.............      3,043      4,121       1078  D784, D1210 & D2515
15..............  Columbia.................  MD.................  5 to 4.............      3,093      3,679        586  D2598 & D1529
16..............  Cumberland & Frostburg...  MD.................  3 to 2.............      4,032      5,157      1,125  D1549 & D1187
17..............  Easton...................  MD.................  4 to 3.............      2,803      3,578        775  D1289
18..............  Edgewater................  MD.................  3 to 2.............      3,920      5,261      1,341  D1315
19..............  Gaithersburg.............  MD.................  5 to 4.............      4,203      5,193        989  D1345 & D1477
20..............  Hagerstown (South).......  MD.................  4 to 3.............      3,910      4,525        615  D626, D1683 & D1180
21..............  Hagerstown (North).......  MD.................  4 to 3.............      4,043      4,323        281  D1147
22..............  La Plata.................  MD.................  3 to 2.............      3,935      5,007      1,072  D1168
23..............  Lusby....................  MD.................  2 to 1.............      5,108     10,000      4,892  D1443 & D2606
24..............  Owings Mills.............  MD.................  4 to 3.............      3,325      4,017        692  D2535
25..............  Prince Frederick.........  MD.................  3 to 2.............      3,734      5,242      1,508  D1526
26..............  Reisterstown.............  MD.................  4 to 3.............      3,423      4,169        746  D786
27..............  Salisbury................  MD.................  3 to 2.............      3,976      5,029      1,053  A351
28..............  Sykesville...............  MD.................  5 to 4.............      3,012      3,732        720  D1324
29..............  Upper Marlboro...........  MD.................  3 to 2.............      3,645      5,328      1,683  D1535
30..............  Mahopac & Carmel.........  NY.................  5 to 4.............      2,940      4,352      1,412  D8325
31..............  New Paltz, Modena &        NY.................  3 to 2.............      3,690      6,601      2,911  A515
                   Highland.
32..............  Poughkeepsie &             NY.................  4 to 3.............      3,269      5,786      2,517  D8368
                   Lagrangeville.
33..............  Rhinebeck & Red Hook.....  NY.................  2 to 1.............      5,023     10,000      4,977  A536
34..............  Wappingers Falls.........  NY.................  3 to 2.............      2,646      4,256      1,610  A598
35..............  Chambersburg.............  PA.................  5 to 4.............      3,277      4,232        955  D1527 & D994
36..............  Waynesboro...............  PA.................  3 to 2.............      5,030      5,537        506  D1663
37..............  York.....................  PA.................  4 to 3.............      3,710      4,135        424  D1241
38..............  Culpepper................  VA.................  4 to 3.............      3,329      4,371      1,042  D250 & D1567
39..............  Fredericksburg...........  VA.................  5 to 4.............      2,696      3,560        864  D358, D419, D450, D1043, D1177,
                                                                                                                         D1235, D1243, D1579 & D2583
40..............  Front Royal..............  VA.................  3 to 2.............      3,638      5,095      1,456  D1059
41..............  Purcellville.............  VA.................  3 to 2.............      3,679      5,321      1,642  D745
42..............  Richmond.................  VA.................  5 to 4.............      2,198      2,857        659  A6421, A6434, A6433, A6498,
                                                                                                                         A6429, A6439, A6435, A6499,
                                                                                                                         A6438 & A6494
43..............  Stafford.................  VA.................  4 to 3.............      3,333      4,038        705  D578 & D1166
44..............  Stephens City............  VA.................  3 to 2.............      4,045      5,018        973  D1489
45..............  Winchester...............  VA.................  3 to 2.............      3,662      5,094      1,433  D366, D362, D733, D1281, D2668 &
                                                                                                                         D1164
46..............  Martinsburg..............  WV.................  4 to 3.............      2,759      3,568        809  D1189 & D2568
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    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2016-18564 Filed 8-4-16; 8:45 am]
 BILLING CODE 6750-01-P