Markets Wired

Koninklijke Ahold and Delhaize Group, which between them own and operate five well-known U.S. supermarket chains, have agreed to sell 81 stores to settle Federal Trade Commission charges that their proposed $28 billion merger would likely be anticompetitive in 46 local markets in Delaware, Maryland, Massachusetts, New York, Pennsylvania, Virginia, and West Virginia.

According to the FTC’s complaint, supermarkets operated by Ahold and Delhaize compete closely for shoppers based on price, format, service, product offerings, promotional activity, and location. Without a remedy, according to the FTC, the merger would eliminate direct supermarket competition to the detriment of consumers in these local markets. As a result, the merger would increase the likelihood that the combined company could unilaterally exercise market power, and that the remaining competitors could coordinate their behavior to raise prices.

At the time the proposed merger was announced in June 2015, Netherlands-based Ahold operated 760 supermarkets under the Stop & Shop, Giant, and Martin’s banners in ten Eastern states and the District of Columbia. Delhaize, headquartered in Belgium, operated 1,291 supermarkets under the Food Lion and Hannaford banners in 14 Eastern and Southern states.

Under the proposed consent agreement – which includes an asset maintenance order and the appointment by the Commission of a monitor trustee – Ahold and Delhaize will divest a total of 81 stores to seven divestiture buyers:

• one store in Maryland to New Albertson’s Inc.;
• seven stores in Massachusetts to Big Y Foods, Inc.;
• ten stores in Virginia to Publix North Carolina, LP;
• one store in Pennsylvania to Saubel’s Market, Inc.;
• 18 stores in Maryland, Pennsylvania, Virginia, and West Virginia to Shop ‘N Save East, LLC, an affiliate of Supervalu;
• six stores in Massachusetts and New York to Tops Markets, LLC; and
• 38 stores in Delaware, Maryland, and Virginia to Weis Markets Inc.

Further details about the divestitures – including a list of the deadlines for the parties to divest stores in each affected local market – are set forth in the analysis to aid public comment for this matter. Schedules A through G of the Decision and Order list the addresses of all the stores to be divested.

The Commission vote to issue the complaint and accept the proposed consent order for public comment was 3-0. The FTC will publish the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through August 22, 2016, after which the Commission will decide whether to make the proposed consent order final. Comments can be filed electronically or in paper form by following the instructions in the “Supplementary Information” section of the Federal Register notice.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $40,000.

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