Koninklijke Ahold N.V. and Delhaize Group NV/SA; Analysis To Aid Public Comment, 51888-51892 [2016-18564]
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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
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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:
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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 https://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 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
privileged or confidential,’’ as discussed
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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 https://
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
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 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).
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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, 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.
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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.
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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.
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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
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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.
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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
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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.
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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
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.....
.....
.....
.....
.....
.....
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]
-----------------------------------------------------------------------
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.
-----------------------------------------------------------------------
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
https://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 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 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.
---------------------------------------------------------------------------
\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 https://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 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 August 22, 2016. 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, 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\
---------------------------------------------------------------------------
\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).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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.
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
\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)
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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
