[Federal Register Volume 60, Number 216 (Wednesday, November 8, 1995)]
[Notices]
[Pages 56338-56344]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-27685]
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FEDERAL TRADE COMMISSION
[File No. 951 0086]
The Stop & Shop Companies, Inc., and SSC Associates, L.P.;
Proposed Consent Agreement With Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed Consent Agreement.
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SUMMARY: This consent agreement, accepted subject to final Commission
approval, settles alleged violations of federal law prohibiting unfair
or deceptive acts and practices and unfair methods of competition
arising from Stop & Shop and SSC Associates' acquisition of the
supermarkets owned by Purity Supreme, Inc. Under the terms of the
proposed order contained in the consent agreement, Stop & Shop and SSC
Associates, among other things, must divest 17 supermarkets within nine
months to a purchaser or purchasers approved by the Commission. Seven
of the 17 supermarkets to be divested are located on Cape Cod, and all
seven must be divested to one acquirer who shall own and operate them
as supermarkets. If Stop & Shop and SSC Associates are unable to divest
all seven stores on Cape Cod to a single acqurier who shall own and
operate them as supermarkets, Stop & Shop and SSC Associates may divest
the stores to no more than two acquriers. If Stop & Shop and SSC
Associates fail to satisfy any of the divestiture provisions, the
Commission may appoint a trustee to divest supermarkets to satisfy the
terms of the order. For a period of ten years, the proposed order also
would prohibit Stop & Shop and SSC Associates from acquiring, without
prior notice to the Commission, supermarket assets located in--or any
interest (such as stock) in any entity that owns or operates a
supermarket located in--Eastern Massachusetts, which includes the
counties of Barnstable, Bristol, Essex, Middlesex, Norfolk, Plymouth,
and Suffolk, and all cities and towns therein. This provision would not
prevent Stop & Shop and SSC Associates from constructing new
supermarket facilities on their own; nor would it prevent Stop & Shop
and SSC Associates from leasing facilities not operated as supermarkets
within the previous six months. Under the terms of an attached Asset
Maintenance Agreement--from the time Stop & Shop and SSC Associates
acquire the assets of Purity that must be divested, until the point at
which the divestitures required by the proposed order have been
completed--Stop & Shop and SSC Associates must maintain their
viability, competitiveness and marketability; must not cause their
wasting or deterioration; and cannot sell, transfer, or otherwise
impair their marketability or viability.
DATES: Comments must be received on or before January 8, 1996.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT:
Ronald B. Rowe, FTC/S-2602, Washington, DC 20580 (202) 326-2610; or
James A. Fishkin, FTC/S-2610, Washington, DC 20580 (202) 326-2663.
SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46, and Section 2.34 of
the Commission's Rules of Practice (16 CFR 2.34), notice is hereby
given that the following 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 sixty (60) days. Public comment is invited. Such
comments or views will be considered by the Commission and will be
available for inspection and copying at its principal office in
accordance with Section 4.9(b)(6)(ii) of the Commission's Rules of
Practice (16 CFR 4.9(b)(6)(ii)).
Agreement Containing Consent Order
The Federal Trade Commission (``Commission'') having initiated an
investigation of the proposed acquisition of Purity Supreme, Inc.
(``Purity'') by The Stop & Shop Companies, Inc. (``Stop & Shop'') and
SSC Associates, L.P., and it now appearing that Stop & Shop and SSC
Associates, L.P., hereinafter sometimes referred to as ``proposed
respondents,'' are willing to enter into an agreement containing an
Order to divest certain assets and to cease and desist from certain
acts, and providing for other relief.
It is hereby agreed by and among proposed respondents, their duly
authorized officers and attorneys, and counsel for the Commission that:
1. Proposed respondent The Stop & Shop Companies, Inc. is a
corporation organized, existing, and doing business under and by virtue
of the laws of the State of Delaware, with its office and principal
place of business located at 1385 Hancock Street, Quincy, MA 02169.
2. Proposed respondent SSC Associates, L.P. is a limited
partnership organized, existing, and doing business under and by virtue
of the laws of the
[[Page 56339]]
State of Delaware, with its office and principal place of business
located at c/o Kohlberg, Kravis, Roberts & Co., 9 West 57th Street, New
York, New York 10019.
3. Proposed respondents admit all the jurisdictional facts set
forth in the draft of complaint here attached.
4. Proposed respondents waive:
a. any further procedural steps;
b. the requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law;
c. all rights to seek judicial review or otherwise to challenge or
contest the validity of the Order entered pursuant to this agreement;
and
d. any claim under the Equal Access to Justice Act.
5. This agreement shall not become part of the public record of the
proceeding unless and until it is accepted by the Commission. If this
agreement is accepted by the Commission it, together with the draft of
complaint contemplated thereby, will be placed on the public record for
a period of sixty (60) days and information in respect thereto publicly
released. The Commission thereafter may either withdraw its acceptance
of this agreement and so notify the proposed respondents, in which
event it will take such action as it may consider appropriate, or issue
and serve its complaint (in such form as the circumstances may require)
and decision, in disposition of the proceeding.
6. This agreement is for settlement purposes only and does not
constitute an admission by proposed respondents that the law has been
violated as alleged in the draft of the complaint here attached, or
that the facts as alleged in the draft complaint, other than
jurisdictional facts, are true.
7. This agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of Section 2.34 of the
Commission's Rules, the Commission may, without further notice to the
proposed respondents, (1) issue its complaint corresponding in form and
substance with the draft of the complaint here attached and its
decision containing the following Order to divest and to cease and
desist in disposition of the proceeding, and (2) make information
public with respect thereto. When so entered, the Order shall have the
same force and effect and may be altered, modified, or set aside in the
same time provided by statute for other orders. The Order shall become
final upon service. Delivery by the United States Postal Service of the
complaint and decision containing the agreed-to Order to proposed
respondents' addresses as stated in this Agreement shall constitute
service. Proposed respondents waive any right they may have to any
other manner of service. The complaint may be used in construing the
terms of the Order, and no agreement, understanding, representation, or
interpretation not contained in the Order or the Agreement may be used
to vary or contradict the terms of the Order.
8. Proposed respondents have read the proposed complaint and Order
contemplated hereby. Proposed respondents understand that once the
Order has been issued, they will be required to file verified written
reports showing that they have fully complied with the Order. Proposed
respondents further understand that they may be liable for civil
penalties in the amount provided by law for each violation of the Order
after it becomes final.
Order
I
It is ordered that, as used in this Order, the following
definitions shall apply:
A. ``Respondent'' or ``Stop & Shop'' means The Stop & Shop
Companies, Inc., its predecessors, subsidiaries, divisions, and groups
and affiliates controlled by The Stop & Shop Companies, Inc., their
successors and assigns, and their directors, officers, employees,
agents, and representatives.
B. ``Respondent'' or ``SSC Associates, L.P.'' means SSC Associates,
L.P., its predecessors, subsidiaries, divisions, and groups and
affiliates controlled by SSC Associates, L.P., their successors and
assigns, and their directors, officers, employees, agents, and
representatives.
C. ``Assets to be divested'' means the supermarket assets described
in Paragraph II.A. of this Order.
D. ``Commission'' means the Federal Trade Commission.
E. ``Supermarket'' means a full-line retail grocery store that
carries a wide variety of food and grocery items in particular product
categories, including bread and dairy products; refrigerated and frozen
food and beverage products; fresh and prepared meats and poultry;
produce, including fresh fruits and vegetables; shelf-stable food and
beverage products, including canned and other types of packaged
products; staple foodstuffs, which may include salt, sugar, flour,
sauces, spices, coffee, and tea; and other grocery products, including
nonfood items such as soaps, detergents, paper goods, other household
products, and health and beauty aids.
F. The term ``Eastern Massachusetts'' means the area in
Massachusetts consisting of the counties of Barnstable, Bristol, Essex,
Middlesex, Norfolk, Plymouth, and Suffolk, and all cities and towns
therein.
II
It is further ordered that:
A. Respondents shall divest, absolutely and in good faith, within
nine (9) months from the date this Order becomes final:
1. The following supermarkets located in Barnstable County,
Massachusetts (a/k/a Cape Cod) to one acquirer who shall own and
operate them:
a. Purity store no. 67 located at 137 Main St. (Route 28--Falmouth
Mall), Falmouth, MA 02540;
b. Purity store no. 79 located at Mashpee Circle (Routes 28 and
151--Mashpee Commons Shopping Center), Mashpee, MA 02649;
c. Purity store no. 63 located at 625 West Main St., Hyannis, MA
02601;
d. Purity store no. 72 located at 1070 Iyanough Road (Route 132),
Hyannis, MA 02601;
e. Purity store no. 66 located at 1080 State Road (Route 28 and
Forest Street), Yarmouth, MA 02664;
f. Purity store no. 65 located at 18 Sisson Road, Harwich, MA
02671; and
g. Purity store no. 86 located at Cranberry Highway (Route 6A) and
West Road, Orleans, MA 02653.
If respondents are unable to divest all of the supermarkets listed
to one acquirer who shall own and operate them, respondents may divest
all of the supermarkets listed to no more than two acquirers who shall
own and operate them.
2. The following supermarkets located in Plymouth County,
Massachusetts:
a. Purity store no. 89 located at 182 Summer St. (Routes 3A and
53--Kingsbury Square Shopping Center), Kingston, MA 02364;
b. Purity store no. 74 located at Ocean and Webster Sts. (Routes
139 and 3A--Webster Square), Marshfield, MA 02050; and
c. Purity store no. 25 located at 240 East Ashland St. (Cary Hill
Shopping Center), Brockton, MA 02402.
3. The following supermarket located in Suffolk County and in the
city of Boston, Massachusetts:
a. Purity store no. 41 located at 630 American Legion Highway,
Roslindale, MA 02131.
4. The following supermarkets located in Middlesex County,
Massachusetts:
a. Purity store no. 03 located at 170 Great Road (Routes 4 and
225), Bedford, MA 01730;
[[Page 56340]]
b. Purity store no. 44 located at 2151 Mystic Valley Parkway,
Medford, MA 02155; and
c. Stop & Shop store no. 436 located at 550 Arsenal Street
(Watertown Mall), Watertown, MA 02172.
5. The following supermarket located in Essex County,
Massachusetts:
a. Purity store no. 01 located at 400 Lynn Fells Parkway, Saugus,
MA 01960.
6. The following supermarkets located in Norfolk County,
Massachusetts:
a. Purity store no. 20 located at 525 Harvard St., Brookline, MA
02146; and
b. Purity store no. 24 located at 10 Pleasant Valley Street, South
Weymouth, MA 02190.
The assets to be divested shall include the supermarket business
operated, and all assets, leases, properties, business and goodwill,
tangible and intangible, utilized in the supermarket operations at the
locations listed above, but shall not include those assets consisting
of or pertaining to Stop & Shop or Purity trade names, trade dress,
trade marks, service marks, and such other intangible assets that
respondents also utilize in their business at locations other than
those listed above.
B. Respondents shall divest the assets to be divested only to an
acquirer or acquirers that receive the prior approval of the Commission
and only in a manner that receives the prior approval of the
Commission. The purpose of the divestiture is to ensure the
continuation of the assets to be divested as ongoing viable enterprises
engaged in the supermarket business and to remedy the lessening of
competition resulting from the acquisition alleged in the Commission's
complaint.
C. Pending divestiture of the assets to be divested, respondents
shall take such actions as are necessary to maintain the viability,
competitiveness, and marketability of the assets to be divested to
comply with Paragraphs II. and III. of this Order and to prevent the
destruction, removal, wasting, deterioration, or impairment of the
assets to be divested except in the ordinary course of business and
except for ordinary wear and tear.
D. Respondents shall comply with all the terms of the Asset
Maintenance Agreement attached to this Order and made a part hereof as
Appendix I. The Asset Maintenance Agreement shall continue in effect
until such time as all assets to be divested have been divested as
required by this Order.
III
It is further ordered that:
A. If respondents have not divested, absolutely and in good faith
and with the Commission's prior approval, the assets to be divested
within nine (9) months from the date this Order becomes final, the
Commission may appoint a trustee to divest any of the assets to be
divested. In the event that the Commission or the Attorney General
brings an action pursuant to Sec. 5(l) of the Federal Trade Commission
Act, 15 U.S.C. 45(l), or any other statute enforced by the Commission,
respondents shall consent to the appointment of a trustee in such
action. Neither the appointment of a trustee nor a decision not to
appoint a trustee under this Paragraph shall preclude the Commission or
the Attorney General from seeking civil penalties or any other relief
available to it, including a court-appointed trustee, pursuant to
Sec. 5(l) of the Federal Trade Commission Act, or any other statute
enforced by the Commission, for any failure by the respondents to
comply with this Order.
B. If a trustee is appointed by the Commission or a court pursuant
to Paragraph III.A. of this Order, respondents shall consent to the
following terms and conditions regarding the trustee's powers, duties,
authority, and responsibilities:
1. The Commission shall select the trustee, subject to the consent
of respondents, which consent shall not be unreasonably withheld. The
trustee shall be a person with experience and expertise in acquisitions
and divestitures. If respondents have not opposed, in writing,
including the reasons for opposing, the selection of any proposed
trustee within ten (10) days after written notice by the staff of the
Commission to respondents of the identity of any proposed trustee,
respondents shall be deemed to have consented to the selection of the
proposed trustee.
2. Subject to the prior approval of the Commission, the trustee
shall have the exclusive power and authority to divest the assets to be
delivered.
3. Within ten (10) days after appointment of the trustee,
respondents shall execute a trust agreement that, subject to the prior
approval of the Commission and, in the case of a court-appointed
trustee, of the court, transfers to the trustee all rights and powers
necessary to permit the trustee to effect the divestitures required by
this Order.
4. The trustee shall have twelve (12) months from the date the
Commission or court approves the trust agreement described in Paragraph
III.B.3. to accomplish the divestitures, which shall be subject to the
prior approval of the Commission. If, however, at the end of the
twelve-month period, the trustee has submitted a plan of divestiture or
believes divestiture can be achieved within a reasonable time, the
divestiture period may be extended by the Commission, or, in the case
of a court-appointed trustee, by the court; provided, however, the
Commission may extend this 12-month period only one (1) time for one
(1) year.
5. The trustee shall have full and complete access to the
personnel, books, records, and facilities related to the assets to be
divested or to any other relevant information, as the trustee may
request. Respondents shall develop such financial or other information
as such trustee may reasonably request and shall cooperate with the
trustee. Respondents shall take no action to interfere with or impede
the trustee's accomplishment of the divestitures. Any delays in
divestiture caused by respondents shall extend the time for divestiture
under this Paragraph in an amount equal to the delay, as determined by
the Commission or, for a court-appointed trustee, by the court.
6. The trustee shall use his or her best efforts to negotiate the
most favorable price and terms available in each contract that is
submitted to the Commission, subject to respondents' absolute and
unconditional obligation to divest at no minimum price. The
divestitures shall be made in the manner and to the acquirer or
acquirers as set out in Paragraph II. of this Order; provided, however,
if the trustee receives bona fide offers for an asset to be divested
from more than one acquiring entity, and if the Commission determines
to approve more than one such acquiring entity, the trustee shall
divest such asset to the acquiring entity or entities selected by
respondents from among those approved by the Commission.
7. The trustee shall serve, without bond or other security, at the
cost and expense of respondents, on such reasonable and customary terms
and conditions as the Commission or a court may set. The trustee shall
have the authority to employ, at the cost and expense of respondents,
such consultants, accountants, attorneys, investment bankers, business
brokers, appraisers, and other representatives and assistants as are
necessary to carry out the trustee's duties and responsibilities. The
trustee shall account for all monies derived from the sale and all
expenses incurred. After approval by the Commission and, in the case of
a court-appointed trustee, by the court, of the account of the trustee,
including fees for his or her services, all remaining monies shall be
paid at the direction of the respondents, and the trustee's power shall
be terminated. The trustee's compensation shall be based at
[[Page 56341]]
least in significant part on a commission arrangement contingent on the
trustee's divesting the assets to be divested to satisfy Paragraph II.
of this Order.
8. Respondents shall indemnify the trustee and hold the trustee
harmless against any losses, claims, damages, liabilities, or expenses
arising out of, or in connection with, the performance of the trustee's
duties, including all reasonable fees of counsel and other expenses
incurred in connection with the preparation for, or defense of any
claim, whether or not resulting in any liability, except to the extent
that such liabilities, losses, damages, claims, or expenses result from
misfeasance, gross negligence, willful or wanton acts, or bad faith by
the trustee.
9. If the trustee ceases to act or fails to act diligently, a
substitute trustee shall be appointed in the same manner as provided in
Paragraph III.A. of this Order.
10. The Commission or, in the case of a court-appointed trustee,
the court, may on its own initiative or at the request of the trustee
issue such additional Orders or directions as may be necessary or
appropriate to accomplish the divestiture required by this Order.
11. The trustee shall have no obligation or authority to operate or
maintain the assets to be divested.
12. The trustee shall report in writing to respondents and the
Commission every sixty (60) days concerning the trustee's efforts to
accomplish divestiture.
IV
It is further ordered that, for a period of ten (10) years from the
date this Order becomes final, respondents shall not, without providing
advance written notification to the Commission, directly or indirectly,
through subsidiaries, partnerships, or otherwise:
A. Acquire any ownership or leasehold interest in any facility that
has operated as a supermarket within six (6) months of the date of such
proposed acquisition in Eastern Massachusetts.
B. Acquire any stock, share capital, equity, or other interest in
any entity that owns any interest in or operates any supermarket or
owned any interest in or operated any supermarket within six (6) months
of such proposed acquisition in Eastern Massachusetts.
Provided, however, that advance written notification shall not
apply to the construction of new facilities by respondents or the
acquisition of or leasing of a facility that has not operated as a
supermarket within six (6) months of respondents' offer to purchase or
lease.
Said notification shall be given on the Notification and Report
Form set forth in the Appendix to Part 803 of Title 16 of the Code of
Federal Regulations as amended (hereinafter referred to as ``the
Notification''), and shall be prepared and transmitted in accordance
with the requirements of that part, except that no filing fee will be
required for any such notification, notification shall be filed with
the Secretary of the Commission, notification need not be made to the
United States Department of Justice, and notification is required only
of respondents and not of any other party to the transaction.
Respondents shall provide the Notification to the Commission at least
thirty days prior to acquiring any such interest (hereinafter referred
to as the ``first waiting period''). If, within the first waiting
period, representatives of the Commission make a written request for
additional information, respondents shall not consummate the
transaction until twenty days after substantially complying with such
request for additional information. Early termination of the waiting
periods in this paragraph may be requested and, where appropriate,
granted by letter from the Bureau of Competition. Provided, however,
that prior notification shall not be required by this paragraph for a
transaction for which notification is required to be made, and has been
made, pursuant to Section 7A of the Clayton Act, 15 U.S.C. 18a.
V
It is further ordered that, for a period of ten (10) years
commencing on the date this Order becomes final:
A. Respondents shall neither enter into nor enforce any agreement
that restricts the ability of any person (as defined in Section 1(a) of
the Clayton Act, 15 U.S.C. 12(a)) that requires any supermarket, any
leasehold interest in any supermarket, or any interest in any retail
location used as a supermarket on or after July 1, 1995, to operate a
supermarket at that site if such supermarket was formerly owned or
operated by Purity in Eastern Massachusetts, or was owned or operated
by respondents either in Barnstable County, Massachusetts (a/k/a Cape
Cod) or not more than two miles from any other supermarket formerly
owned or operated by Purity in Eastern Massachusetts. Provided,
however, respondents shall not be prevented from entering into or
enforcing any agreement (1) requiring their approval of any sublease,
assignment, or change in occupancy, which approval shall not be
unreasonably withheld; provided further that use of a site for the
operation of a supermarket shall not be a basis for withholding such
approval; or (2) affecting any existing supermarket owned or operated
by respondents and located not more than one mile from a replacement
supermarket owned or operated by respondents and opened within six
months of the date of such agreement.
B. Respondents shall not remove any equipment from a supermarket
owned or operated by respondents in Eastern Massachusetts prior to a
sale, sublease, assignment, or change in occupancy, except for
replacement or relocation of such equipment in or to any other
supermarket owned or operated by respondents in the ordinary course of
business, or as part of any negotiation for a sale, sublease,
assignment, or change in occupancy of such supermarket.
VI
It is further ordered that:
A. Within sixty (60) days after the date this Order becomes final
and every sixty (60) days thereafter until respondents have fully
complied with the provisions of Paragraphs II. or III. of this Order,
respondents shall submit to the Commission verified written reports
setting forth in detail the manner and form in which they intend to
comply, are complying, and have complied with Paragraphs II. and III.
of this Order. Respondents shall include in their compliance reports,
among other things that are required from time to time, a full
description of the efforts being made to comply with Paragraphs II. and
III. of the Order, including a description of all substantive contracts
or negotiations for the divestitures and the identity of all parties
contacted. Respondents shall include in their compliance reports copies
of all written communications to and from such parties, all internal
memoranda, and all reports and recommendations concerning divestiture.
B. One (1) year from the date of this Order becomes final, annually
for the next nine (9) years on the anniversary of the date this Order
becomes final, and at other times as the Commission may require,
respondents shall file verified written reports with the Commission
setting forth in detail the manner and form in which they have complied
and are complying with this Order.
VII
It is further ordered that respondents shall notify the Commission
at least thirty (30) days prior to any proposed change in respondents
such as dissolution, assignment, sale resulting in the emergency of a
successor
[[Page 56342]]
corporation, or the creation or dissolution of subsidiaries or any
other change in respondents that may affect compliance obligations
arising out of the Order.
VIII
It is further ordered that, for the purpose of determining or
securing compliance with this Order, respondents shall permit any duly
authorized representative of the Commission:
A. Upon five days' written notice to respondents, access, during
office hours and in the presence of counsel, to inspect and copy all
books, ledgers, accounts, correspondence, memoranda and other records
and documents in the possession or under the control of respondents
relating to any matters contained in this Order; and
B. Upon five days' written notice to respondents and without
restraint or interference from respondents, to interview respondents or
officers, directors, or employees of respondents in the presence of
counsel.
Asset Maintenance Agreement
This Asset Maintenance Agreement (``Agreement'') is by and between
The Stop & Shop Companies, Inc. (``Stop & Shop''), a corporation
organized, existing, and doing business under and by virtue of the laws
of the State of Delaware, with its office and principal place of
business located at 1385 Hancock Street, Quincy, MA 02169 11420; SSC
Associates, L.P. (``SSC Associates''), a limited partnership organized,
existing, and doing business under and by virtue of the laws of the
State of Delaware, with its office and principal place of business
located at c/o Kohlberg, Kravis, Roberts & Co., 9 West 57th Street, New
York, New York 10019; and the Federal Trade Commission
(''Commission''), an independent agency of the United States
Government, established under the Federal Trade Commission Act of 1914,
15 U.S.C. Sec. 41, et seq. (collectively ``the Parties'').
Premises
Whereas, Stop & Shop and SSC Associates, pursuant to an agreement
dated April 21, 1995, agreed to acquire all of Purity Supreme, Inc.
(hereinafter ``Acquisition''); and
Whereas, the Commission is now investigating the Acquisition to
determine if it would violate any of the statutes enforced by the
Commission; and
Whereas, if the Commission accepts the attached Agreement
Containing Consent Order, the Commission is required to place it on the
public record for a period of sixty (60) days for public comment and
may subsequently withdraw such acceptance pursuant to the provisions of
Section 2.34 of the Commission's Rules; and
Whereas, the Commission is concerned that if an agreement is not
reached preserving the status quo ante of the assets to be divested as
described in II.A. of the attached Agreement Containing Consent Order
(``Assets'') during the period prior to their divestitures, when those
Assets will be in the hands of Stop & Shop and SSC Associates, that any
divestiture resulting from any administrative proceeding challenging
the legality of the Acquisition might not be possible, or might produce
a less than effective remedy; and
Whereas, the Commission is concerned that prior to divestiture to
the acquirer, it may be necessary to preserve the continued viability
and competitiveness of the Assets; and
Whereas, the purpose of this Agreement and of the Consent Order is
to preserve the Assets pending the divestiture to the acquirer approved
by the Federal Trade Commission under the terms of the Order, in order
to remedy any anticompetitive effects of the Acquisition; and
Whereas, Stop & Shop and SSC Associates entering into this
Agreement shall in no way be construed as an admission by Stop & Shop
and SSC Associates that the Acquisition is illegal; and
Whereas, Stop & Shop and SSC Associates understand that no act or
transaction contemplated by this Agreement shall be deemed immune or
exempt from the provisions of the antitrust laws, or the Federal Trade
Commission Act by reason of anything contained in this Agreement;
Now, therefore, in consideration of the Commission's agreement
that, unless the Commission determines to reject the Consent Order, it
will not seek further relief from the parties with respect to the
Acquisition, except that the Commission may exercise any and all rights
to enforce this Agreement and the Consent Order annexed hereto and made
a part thereof, and, in the event the required divestiture is not
accomplished, to appoint a trustee to seek divestiture of the Assets,
the Parties agree as follows:
Terms of Agreement
1. Stop & Shop and SSC Associates agree to execute, and upon its
issuance to be bound by, the attached Consent Order. The Parties
further agree that each term defined in the attached Consent Order
shall have the same meaning in this Agreement.
2. Unless the Commission brings an action to seek to enjoin the
proposed Acquisition pursuant to Section 13(b) of the Federal Trade
Commission Act, 15 U.S.C. Sec. 53(b), and obtains a temporary
restraining order or preliminary injunction blocking the proposed
Acquisition, Stop & Shop and SSC Associates will be free to close the
Acquisition after 3:00 p.m., October 31, 1995.
3. Stop & Shop and SSC Associates agree that from the date this
Agreement is accepted until the earlier of the dates listed in
subparagraphs 3.a-3.b, they will comply with the provisions of this
Agreement:
a. three business days after the Commission withdraws its
acceptance of the Consent Order pursuant to the provisions of Section
2.34 of the Commission's Rules; or
b. on the day the divestiture set out in the Consent Order has been
completed.
4. From the time Stop & Shop and SSC Associates acquire the Assets
until the divestiture set out in the Consent Order has been completed,
Stop & Shop and SSC Associates shall maintain the viability,
competitiveness and marketability of the Assets, and shall not cause
the wasting or deterioration of the Assets, nor shall they sell,
transfer, encumber or otherwise impair their marketability or
viability.
5. Should the Commission seek in any proceeding to compel Stop &
Shop and SSC Associates to divest themselves of the Assets or to seek
any other injunctive or equitable relief, Stop & Shop and SSC
Associates shall not raise any objection based upon the expiration of
the applicable Hart-Scott-Rodino Antitrust Improvements Act waiting
period or the fact that the Commission has not sought to enjoin the
Acquisition. Stop & Shop and SSC Associates also waive all rights to
contest the validity of this Agreement.
6. For the purpose of determining or securing compliance with this
Agreement, subject to any legally recognized privilege, and upon
written request with reasonable notice to Stop & Shop and SSC
Associates and to their principal offices, Stop & Shop and SSC
Associates shall permit any duly authorized representative or
representatives of the Commission:
a. access during the office hours of Stop & Shop and SSC
Associates, in the presence of counsel, to inspect and copy all books,
ledgers, accounts, correspondence, memoranda and other records and
documents in the possession or under the control of Stop
[[Page 56343]]
& Shop and SSC Associates relating to compliance with this Agreement;
and
b. upon five (5) days' notice to Stop & Shop and SSC Associates and
without restraint or interference from them, to interview officers or
employees of Stop & Shop and SSC Associates, who may have counsel
present, regarding any such matters.
7. This Agreement shall not be binding until approved by the
Commission.
Analysis of Proposed Consent Order To Aid Public Comment
The Federal Trade Commission (``Commission'') has accepted for
public comment from The Stop & Shop Companies, Inc. (``Stop & Shop'')
and SSC Associates, L.P. (``SSC Associates'') an agreement containing a
proposed consent order. The agreement is designed to remedy
anticompetitive effects stemming from Stop & Shop and SSC Associates'
acquisition of the supermarkets owned by Purity Supreme, Inc.
(``Purity'').
The agreement has been placed on the public record for sixty (60)
days for receipt of comments by interested persons. Comments received
during this period will become part of the public record. After sixty
days, the Commission will again review the agreement and the comments
received and will decide whether it should withdraw from the agreement
or make final the agreement's proposed order.
The Commission's draft complaint charges that on or about April 21,
1995, Stop & Shop and SSC Associates agreed to acquire all of the
supermarkets owned by Purity. The Commission has reason to believe that
the acquisition, as well as the agreement to enter into the
acquisition, would substantially lessen competition in violation of
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.
According to the draft complaint, Stop & Shop and Purity are direct
competitors for the retail sale of food and grocery items in
supermarkets, or narrower product markets contained therein. Stores
other than supermarkets do not have a significant price-constraining
effect on food and grocery products sold at supermarkets. Most
consumers shopping for food and grocery products at supermarkets are
not likely to shop elsewhere in response to a small price increase by
supermarkets. In addition, supermarkets do not regularly price-check
food and grocery products sold at other types of stores and do not
typically change their food and grocery prices in response to prices at
other types of stores.
Food stores other than supermarkets, such as convenience stores,
``mom & pop'' stores, and specialty food stores (e.g., seafood markets,
bakeries, etc.), typically offer far fewer items than the average
supermarket and charge higher prices for many of the same or similar
items. Other types of stores that sell some food and grocery products,
such as large drug stores and mass merchandisers, offer only a limited
number of items sold in the typical supermarket. The small number of
upscale food stores emphasizing organically grown fruits and
vegetables, hormone-free meat and poultry products, and other more
expensive food products, and club stores that offer only a limited
number of food and grocery products in bulk sizes, do not have a
significant effect on market concentration.
According to the draft complaint, the relevant sections of the
country in which to analyze the acquisition of Purity are the
following:
a. Barnstable County, Massachusetts (a/k/a Cape Cod), and narrower
markets contained therein, including Falmouth, Mashpee, Hyannis,
Yarmouth, Harwich, and Orleans;
b. the South Shore area of Massachusetts, which consists of parts
of Suffolk and Plymouth counties and narrower markets contained
therein, including Marshfield and Kingston;
c. the Boston, Massachusetts metropolitan area, which consists of
the city of Boston and parts of Essex, Middlesex, Norfolk, and Suffolk
counties, and narrower markets contained therein, including Saugus,
Medford, Watertown, Brookline, the Roslindale neighborhood in Boston,
and Weymouth;
d. Brockton, Massachusetts; and
e. Bedford, Massachusetts.
According to the draft complaint, these markets are highly
concentrated. The post-acquisition Herfindahl-Hirschman Index
(``HHI''), a measurement of market concentration calculated by summing
the squares of the individual market shares of all the participants, in
Barnstable County, Massachusetts (a/k/a Cape Cod) would increase by
approximately 2,778 points, from approximately 3,541 to approximately
6,319. The post-acquisition HHI in Falmouth, Mashpee, and Hyannis would
increase to 10,000 or near 10,000 in each of these markets. The post-
acquisition HHI in Yarmouth, Harwich, and Orleans would significantly
increase already highly concentrated markets.
The post-acquisition HHI in the South Shore area of Massachusetts
would increase by approximately 3,866 points, from approximately 3,930
to approximately 7,795. The post-acquisition HHI in Marshfield and
Kingston would increase to 10,000 or near 10,000 in each of these
markets.
The post-acquisition HHI in the Boston, Massachusetts metropolitan
area would increase by approximately 512 points, from approximately
1,381 to approximately 1,893. The post-acquisition HHI exceeds 2,000
when club stores and upscale food stores are not included in the
market. The post-acquisition HHI in Saugus, Medford, Watertown,
Brookline, the Roslindale neighborhood in Boston, and Weymouth would
significantly increase already highly-concentrated markets.
The post-acquisition HHI in Bedford, Massachusetts would increase
by approximately 4,702 points, from approximately 5,298 to
approximately 10,000.
The post-acquisition HHI in Brockton, Massachusetts would increase
by approximately 497 points, from approximately 5,162 to approximately
5,659.
According to the draft complaint, entry into the retail sale of
food and grocery products in supermarkets in the relevant sections of
the country is difficult and would not be timely, likely, or sufficient
to prevent anticompetitive effects in the relevant sections of the
country. Entry that would prevent the anticompetitive effects in the
relevant sections of the country is generally difficult because there
are few available sites suitable for supermarkets and the time
necessary to receive state and local regulatory approval for a new
supermarket is typically quite long.
Stop & Shop and SSC Associates' acquisition of Purity may reduce
competition in these markets by eliminating the direct competition
between Stop & Shop and Purity, by increasing the likelihood that Stop
& Shop will become a dominant firm, and by increasing the likelihood of
collusive behavior among the remaining competitors. The Agreement
Containing Consent Order attempts to remedy the Commission's
competitive concerns about the acquisition. Under the terms of the
proposed order Stop & Shop and SSC Associates must divest 17
supermarkets within nine months to a purchaser or purchasers approved
by the Commission. Seven of the 17 supermarkets to be divested are
located on Cape Cod, and all seven must be divested to one acquirer who
shall own and operate them as supermarkets. If Stop & Shop and SSC
Associates are unable to divest all seven stores on Cape Cod to a
single acquirer who shall own
[[Page 56344]]
and operate them as supermarkets, Stop & Shop and SSC Associates may
divest the stores to no more than two acquirers. If Stop & Shop and SSC
Associates fail to satisfy any of the divestiture provisions, the
Commission may appoint a trustee to divest supermarkets to satisfy the
terms of the order. The 17 supermarkets to be divested are:
1. The following supermarkets located in Barnstable County,
Massachusetts (a/k/a Cape Cod):
a. Purity store no. 67 located at 137 Main St. (Route 28--Falmouth
Mall), Falmouth, MA 02540;
b. Purity store no. 79 located at Mashpee Circle (Routes 28 and
151--Mashpee Commons Shopping Center), Mashpee, MA 02649;
c. Purity store no. 63 located at 625 West Main St., Hyannis, MA
02601;
d. Purity store no. 72 located at 1070 Iyanough Road (Route 132),
Hyannis, MA 02601;
e. Purity Store no. 66 located at 1080 State Road (Route 28 and
Forest Street), Yarmouth, MA 02664;
f. Purity store no. 65 located at 18 Sisson Road, Harwich, MA
02671; and
g. Purity store no. 86 located at Cranberry Highway (Route 6A) and
West Road, Orleans, MA 02653.
2. The following supermarkets located in Plymouth County,
Massachusetts:
a. Purity store no. 89 located at 182 Summer St. (Routes 3A and
53--Kingsbury Square Shopping Center), Kingston, MA 02364;
b. Purity store no. 74 located at Ocean and Webster Sts. (Routes
139 and 3A--Webster Square), Marshfield, MA 02050; and
c. Purity store no. 25 located at 240 East Ashland St. (Cary Hill
Shopping Center), Brockton, MA 02402.
3. The following supermarket located in Suffolk County and in the
city of Boston, Massachusetts:
a. Purity store no. 41 located at 630 American Legion Highway,
Roslindale, MA 02131.
4. The following supermarkets located in Middlesex County,
Massachusetts:
a. Purity store no. 03 located at 170 Great Road (Routes 4 and
225), Bedford, MA 01730;
b. Purity store no. 44 located at 2151 Mystic Valley Parkway,
Medford, MA 02155; and
c. Stop & Shop store no. 436 located at 550 Arsenal Street
(Watertown Mall), Watertown, MA 02172.
5. The following supermarket located in Essex County,
Massachusetts:
a. Purity store no. 01 located at 400 Lynn Fells Parkway, Saugus,
MA 01960.
6. The following supermarkets located in Norfolk County,
Massachusetts:
a. Purity store no. 20 located at 525 Harvard St., Brookline, MA
02146; and
b. Purity store no. 24 located at 10 Pleasant Valley Street, South
Weymouth, MA 02190.
For a period of ten years from the date the order becomes final,
the order also prohibits Stop & Shop and SSC Associates from acquiring,
without prior notice to the Commission, supermarket assets located in,
or any interest (such as stock) in any entity that owns or operates a
supermarket located in Eastern Massachusetts. Eastern Massachusetts
consists of the counties of Barnstable, Bristol, Essex, Middlesex,
Norfolk, Plymouth, and Suffolk, and all cities and towns therein. This
provision does not prevent Stop & Shop and SSC Associates from
constructing new supermarket facilities on their own; nor does it
prevent Stop & Shop and SSC Associates from leasing facilities not
operated as supermarkets within the previous six months.
For a period of ten years, the order prohibits Stop & Shop and SSC
Associates from entering into or enforcing any agreement that restricts
the ability of any person acquiring any location used as a supermarket,
or interest in any location used as a supermarket on or after July 1,
1995, to operate a supermarket at that site if that site was a former
Purity store in Eastern Massachusetts, and any supermarket owned or
operated by any Stop & Shop and SSC Associates either in Cape Cod or
not more than two miles from any other supermarket formerly owned or
operated by Purity in Eastern Massachusetts. There is an exception for
agreements that impose restrictions on supermarkets that are located no
more than one mile from a new replacement supermarket owned and
operated by Stop & Shop or SSC Associates when the restrictions are
entered into within six months of the opening of the new replacement
store. In addition, Stop & Shop and SSC Associates may not remove any
equipment from a supermarket they own or operate prior to a sale,
sublease, assignment, or change in occupancy, except in the ordinary
course of business or certain other circumstances.
Stop & Shop and SSC Associates are required to provide to the
Commission a report of compliance with the order within sixty (60) days
following the date the order becomes final, every sixty (60) days
thereafter until the divestitures are completed, and annually for a
period of ten years.
Stop & Shop and SSC Associates also entered into an Asset
Maintenance Agreement. Under the terms of the Asset Maintenance
Agreement, from the time Stop & Shop and SSC Associates acquire the
assets of Purity that must be divested until the divestitures set out
in the attached consent agreement have been completed, Stop & Shop and
SSC Associates must maintain their viability, competitiveness and
marketability, must not cause their wasting or deterioration, and
cannot sell, transfer, or otherwise impair their marketability or
viability.
The purpose of this analysis is to invite public comment on the
proposed consent order to aid the Commission in its determination of
whether it should make final the proposed consent order contained in
the agreement.
This analysis is not intended to constitute an official
interpretation of the agreement and proposed consent order, nor is it
intended to modify the terms of the agreement and proposed consent
order in any way.
By direction of the Commission.
Donald S. Clark,
Secretary.
Statement of Commissioner Mary L. Azcuenaga Concurring in Part and
Dissenting in Part in The Stop & Shop Companies, Inc., File No. 951-
0086
I concur in the Commission's decision to accept a proposed consent
order for public comment to the extent that the order requires
divestiture of supermarkets on Cape Cod and the South Shore, but
dissent to the extent that the order requires divestiture of stores in
the Boston metropolitan area. Although serious questions can be raised
about some of the allegations in the complaint that relate to the
product market, I find reason to believe that the law has been violated
even if the product market includes sales of food and groceries in
stores other than traditional supermarkets. Assuming either the product
market alleged in the complaint or a broader product market, I concur
in the decision to accept the order as to Cape Cod and South Shore. I
dissent from the decision to require divestiture of stores in the
Boston metropolitan area. Although a small geographic market
theoretically may exist within a broad metropolitan area, at this time
the record before the Commission does not contain sufficient evidence
to support a finding of reason to believe that the communities of
Saugus, Medford, Brookline, Roslindale, Watertown, Weymouth, Brockton
and Bedford, Massachusetts are relevant antitrust markets.
[FR Doc. 95-27685 Filed 11-7-95; 8:45 am]
BILLING CODE 6750-01-M
