The Golub Corporation and Tops Markets Corporation; Analysis of Agreement Containing Consent Orders To Aid Public Comment, 66304-66306 [2021-25439]

Agencies

• FEDERAL TRADE COMMISSION

[Federal Register Volume 86, Number 222 (Monday, November 22, 2021)]
[Notices]
[Pages 66304-66306]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-25439]


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FEDERAL TRADE COMMISSION

[File No. 211 0002/Docket No. C-4753]


The Golub Corporation and Tops Markets Corporation; Analysis of 
Agreement Containing Consent Orders To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement; request for comment.

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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 of Proposed Consent Orders to 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 December 22, 2021.

ADDRESSES: Interested parties may file comments online or on paper, by 
following the instructions in the Request for Comment part of the 
SUPPLEMENTARY INFORMATION section below. Please write: ``Golub 
Corporation and Tops Markets Corporation; File No. 211 0002'' on your 
comment, and file your comment online at https://www.regulations.gov by 
following the instructions on the web-based form. If you prefer to file 
your comment on paper, please 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: Lindsey Bohl (202-326-2805), Bureau of 
Competition, Federal Trade Commission, 400 7th Street SW, Washington, 
DC 20024.

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 a consent order to cease and desist, having been filed with 
and accepted, subject to final approval, by the Commission, has been 
placed on the public record for a period of thirty (30) days. The 
following Analysis of Agreement Containing Consent Orders 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 website at 
this web address: https://www.ftc.gov/news-events/commission-actions.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before December 22, 
2021. Write ``Golub Corporation and Tops Markets Corporation; File No. 
211 0002'' 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 https://www.regulations.gov website.
    Due to protective actions in response to the COVID-19 pandemic and 
the agency's heightened security screening, postal mail addressed to 
the Commission will be subject to delay. We strongly encourage you to 
submit your comments online through the https://www.regulations.gov 
website.
    If you prefer to file your comment on paper, write ``Golub 
Corporation and Tops Markets Corporation; File No. 211 0002'' 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. If 
possible, submit your paper comment to the Commission by courier or 
overnight service.
    Because your comment will be placed on the publicly accessible 
website at https://www.regulations.gov, you are solely responsible for 
making sure your comment does not include any sensitive or confidential 
information. In particular, your comment should not include any 
sensitive personal information, such as your or anyone else'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 your comment does not include any 
sensitive health information, such as medical records or other 
individually identifiable health information. In addition, your comment 
should not include any ``trade secret or any commercial or financial 
information which . . . is privileged or confidential''--as provided by 
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)--including in particular competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    Comments containing material for which confidential treatment is 
requested must be filed in paper form, must be clearly labeled 
``Confidential,'' and must comply with FTC Rule 4.9(c). 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). Your comment will be kept 
confidential only if the General Counsel grants your request in 
accordance with the law and the public interest. Once your comment has 
been posted on https://www.regulations.gov--as legally required by FTC 
Rule 4.9(b)--we cannot redact or remove your comment from that website, 
unless you submit a confidentiality request that meets the requirements 
for such treatment under FTC Rule 4.9(c), and the General Counsel 
grants that request.
    Visit the FTC website at https://www.ftc.gov to read this Notice 
and the news release describing this matter. The FTC Act and other laws 
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 it receives on 
or before December 22, 2021. For information on the Commission's 
privacy policy, including routine uses permitted by the Privacy Act, 
see https://www.ftc.gov/site-information/privacy-policy.

Analysis of Agreement Containing Consent Orders 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 Orders (``Consent Agreement'') from The Golub Corporation, 
which operates Price Chopper, Market 32, and Market Bistro stores 
(collectively, ``Golub'') and Tops Markets Corporation (``Tops'') 
(collectively, the ``Respondents'').

[[Page 66305]]

Pursuant to an Agreement and Plan of Merger dated February 8, 2021, 
Golub and Tops intend to combine their businesses through a merger 
(``the Merger''). The Merger will result in a combined company with 
nearly 300 supermarkets across six states. The purpose of the Consent 
Agreement is to remedy the anticompetitive effects that otherwise would 
result from the Merger. Under the terms of the proposed Decision and 
Order (``Order''), Respondents are required to divest twelve 
supermarkets and related assets in eleven local geographic markets 
(collectively, the ``relevant markets'') in New York and Vermont to a 
Commission-approved buyer, C&S Wholesale Grocers (``C&S''). 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 C&S. The Commission also issued the Order to 
Maintain Assets.
    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 FTC Act, as amended, 15 U.S.C. 45, by removing a 
direct and substantial supermarket competitor in each of the eleven 
relevant markets. The elimination of this competition would result in 
significant competitive harm; specifically, absent a remedy, the Merger 
would allow the merged firm to increase prices above competitive 
levels, unilaterally or through coordinated interaction among the 
remaining market participants. Similarly, there is significant risk 
that the merged firm may decrease quality and service aspects of its 
stores below competitive levels. The proposed 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.
    The Consent Agreement has been placed on the public record for 30 
days for receipt of comments from interested persons. Comments received 
during this period will become part of the public record. After 30 
days, the Commission will review the comments received and decide 
whether it should withdraw, modify, or finalize the proposed Order.

II. The Respondents

    Respondent Golub owns and operates 131 grocery stores under the 
Price Chopper, Market 32, and Market Bistro banners. The Golub stores 
are located in New York, Connecticut, Vermont, Massachusetts, New 
Hampshire, and Pennsylvania.
    Respondent Tops owns and operates a supermarket chain with 162 
stores under the Tops banner in New York, Pennsylvania, and Vermont.

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. 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.\1\ Consistent with prior Commission precedent, the 
Commission has excluded these other types of retailers from the 
relevant product market.\2\
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    \1\ 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).
    \2\ See, e.g., Koninklijke Ahold N.V./Delhaize Group, Docket C-
4588 (Jul. 22, 2016); 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 localized areas in which Respondents' supermarkets 
compete. Most of Respondents' overlapping supermarkets raising concerns 
are within approximately eight miles or less of each other. The 
contours of the relevant geographic markets depend 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 Respondents' supermarkets are located in more densely 
populated cities.
    Absent relief, of the eleven geographic markets, the Merger would 
result in a merger-to-monopoly in three markets and a merger-to-duopoly 
in four markets. In the remaining markets, the Merger would reduce the 
number of market participants from four to three in three markets and 
from five to four in one market.\3\ Each relevant market would be 
highly concentrated following the Merger.
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    \3\ See Exhibit A.
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    The Merger would also eliminate substantial competition between 
Golub and Tops and would increase the ability and incentive of the 
combined company to raise prices unilaterally after the Merger. The 
fact that few supermarket competitors will remain in each of these 
areas also increases the likelihood of competitive harm through 
coordinated interaction. The Merger would also decrease incentives to 
compete on non-price factors, such as service levels, convenience, and 
quality.
    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

[[Page 66306]]

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.

IV. The Proposed Order and the Order To Maintain Assets

    The proposed Order and the Order to Maintain Assets remedy the 
likely anticompetitive effects in the relevant markets. The proposed 
Order, which requires the divestiture of Tops supermarkets in each 
relevant market to a Commission-approved upfront buyer, C&S, will 
restore fully the competition that otherwise would be eliminated in 
these markets as a result of the Merger.
    The proposed buyer appears to be a suitable purchaser well-
positioned to enter the relevant 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 C&S are all located outside the 
relevant geographic markets in which it is purchasing divested stores.
    C&S is the largest private wholesale grocery supply company and is 
the eleventh largest company in America. C&S has owned and operated 
retail stores in the past, including in certain of the relevant 
markets. C&S recently expanded its retail operations with the 
acquisition of eleven Piggly Wiggly Midwest retail stores, and hired a 
former retail grocery executive with significant retail experience to 
lead retail efforts. C&S has sufficient financing to fund the 
acquisition and operate the business. C&S also has sufficient 
distribution and supply capabilities through its wholesale business, 
which can efficiently supply the twelve stores.
    The proposed Order requires Respondents to divest the twelve Tops 
stores and related assets as ongoing businesses to C&S on a rolling 
basis, beginning by January 17, 2022, and continuing (two stores per 
week) for six weeks. The proposed Order also contains additional 
provisions designed to ensure the adequacy of the proposed relief. For 
example, the proposed 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 C&S. If, at the time before the proposed Order is made 
final, the Commission determines that C&S is not an acceptable buyer, 
Respondents must rescind the divestiture(s) and divest the assets to a 
different buyer that receives the Commission's prior approval. The 
proposed Order imposes other terms, including the obligation to provide 
Transition Assistance to C&S as may be needed, an obligation to 
facilitate C&S's interviewing and hiring of employees, and the 
appointment of a Monitor to oversee the Respondents' compliance with 
the requirements of the proposed Order and Order to Maintain Assets. 
The proposed Order requires the Respondents to receive the Commission's 
prior approval, for a period of ten years, to acquire any interest in a 
supermarket that has operated or is operating in the counties in which 
the relevant markets are located. Finally, the proposed Order also 
prohibits the Respondents from entering into or enforcing agreements to 
restrict a new owner from operating a supermarket at any store 
Respondents may sell in these areas.
    The proposed Order also contains a ten-year prior approval 
provision relating to C&S, which prohibits C&S from selling acquired 
stores for a period of three years after the Order is issued, except to 
an acquirer that receives the prior approval of the Commission. The 
initial three-year period is followed by an additional seven-year 
period during which C&S is required to receive prior approval from the 
Commission to sell an acquired store to a buyer that operates one or 
more supermarkets in the same county. Similar to the prohibition on 
Respondents, the proposed Order also prohibits C&S from entering into 
or enforcing certain restrictive covenants in any of relevant markets 
for the duration of the Order.
    The purpose of this analysis is to facilitate public comment on the 
Consent Agreement and proposed Order to aid the Commission in 
determining whether it should make the proposed Order final. This 
analysis is not an official interpretation of the proposed Order and 
does not modify its terms in any way.

    By direction of the Commission.
April J. Tabor,
Secretary.

                                Exhibit A
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    State              City            Merger result   Divested store(s)
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NY..........  Cooperstown (Otsego    2 to 1..........  Tops 568
               County).
NY..........  Cortland (Cortland     4 to 3..........  Tops 517
               County).
NY..........  Lake Placid/Saranac    3 to 2..........  Tops 707
               Lake (Franklin
               County).
NY..........  Norwich (Chenango      3 to 2..........  Tops 569
               County).
NY..........  Oneida/Sherrill        3 to 2..........  Tops 364
               (Oneida County).
NY..........  Owego (Tioga County).  2 to 1..........  Tops 579
NY..........  Plattsburgh/Peru       5 to 4..........  Tops 713
               (Clinton County).
NY..........  Rome (Oneida County).  4 to 3..........  Tops 587
NY..........  Warrensburg (Warren    2 to 1..........  Tops 701
               County).
NY..........  Watertown (Jefferson   4 to 3..........  Tops 597, Tops
               County).                                 589
VT..........  Rutland (Rutland       3 to 2..........  Tops 740
               County).
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[FR Doc. 2021-25439 Filed 11-19-21; 8:45 am]
BILLING CODE 6750-01-P