[Federal Register Volume 62, Number 184 (Tuesday, September 23, 1997)]
[Notices]
[Pages 49687-49689]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25185]
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FEDERAL TRADE COMMISSION
[File No. 971-0093]
Jitney-Jungle Stores of America, Inc.; Bruckmann, Rosser,
Sherrill & Co., L.P.; Delta Acquisition Corp.; Delchamps, Inc.;
Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: The consent agreement in this matter settles alleged
violations of federal law prohibiting unfair or deceptive acts or
practices or unfair methods of competition. The attached Analysis to
Aid Public Comment describes both the allegations in the draft
complaint that accompanies the consent agreement 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 November 24, 1997.
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:
George S. Cary, Federal Trade Commission, H-374, 6th St. and
Pennsylvania Ave. NW, Washington, DC 20580, (202) 326-3741. Phillip L.
Broyles, Federal Trade Commission, S-2105, 6th St. and Pennsylvania
Ave. NW, Washington, DC 20580. (202) 326-2805.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46, and Sec. 2.34 of the
Commission's rules of practice (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 sixty (60) days. The following Analysis to Aid Public
Comment describes the terms of the consent agreement, and the
allegations in the accompanying complaint. An electronic copy of the
full text of the consent agreement package can be obtained from the
Commission Actions section of the FTC Home Page (for September 12,
1997), on the World Wide Web, at ``http://www.ftc.gov/os/
actions97.htm.'' A paper copy can be obtained from the FTC Public
Reference Room, Room H-130, Sixth Street and Pennsylvania Avenue, NW,
Washington, DC 20580, either in person or by calling (202) 326-3627.
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 Sec. 4.9(b)(6)(ii) of the
Commission's rules of practice (16 CFR 4.9(b)(6)(ii)).
Analysis of Proposed Consent Order To Aid Public Comment
I. Introduction
The Federal Trade Commission (``Commission'') has accepted for
public comment from Jitney-Jungle Stores of America, Inc. (``Jitney-
Jungle''), Bruckmann, Rosser, Sherrill & Co., L.P. (``Bruckmann''),
Delta Acquisition Corporation (``Delta''), and Delchamps, Inc.
(``Delchamps'') (collectively ``the proposed Respondents'') an
Agreement Containing Consent Order (``the proposed consent order'').
Bruckmann owns a majority of the voting securities of Jitney-Jungle,
and Delta is wholly-owned subsidiary of Jitney-Jungle. The proposed
consent order is designed to remedy likely anticompetitive effects
arising from Jitney-Jungle and Delta's proposed acquisition of the
outstanding shares of Delchamps.
II. Description of the Parties and the Acquisition
Jitney-Jungle, which is headquartered in Jackson, Mississippi, is
one of the leading supermarket chains in the Southeast. Jitney-Jungle
operates 105 supermarkets in the states of Alabama, Arkansas,
Louisiana, Mississippi, Florida, and Tennessee. The company is the
largest supermarket operator in Mississippi with 72 stores. The company
operates under three formats: (1) 78 conventional supermarkets under
the ``Jitney-Jungle'' trade name; (2) 23 discount supermarkets under
the ``Sack and Save,'' ``Mega Market,'' and ``Mega Pantry'' trade
names; and (3) four premium supermarkets under the ``Jitney Premier''
trade name. Jitney-Jungle has sales of approximately $1.13 billion at
its supermarkets, and total sales of $1.28 billion, in its 1997 fiscal
year. The ultimate parent entity of Jitney-Jungle is Bruckmann, which
owns a majority of the voting securities of Jitney-Jungle.
Delchamps, which is headquartered in Mobile, Alabama, is another
leading supermarket chain in the Southeast. Delchamps operates a total
of 118 conventional supermarkets under the ``Delchamps'' trade name.
Delchamps' supermarkets are located in Alabama, Florida, Louisiana, and
Mississippi. In addition, the company operates ten liquor stores in the
state of Florida. Louisiana, and Mississippi. In addition, the company
operates ten liquor stores in the state of Florida. Delchamps had sales
of approximately $1.08 billion at its supermarkets, and total sales of
$1.1 billion, in its 1997 fiscal year.
On or about July 8, 1997, Jitney-Jungle and Delta, a wholly-owned
subsidiary of Jitney-Jungle, entered into a cash tender offer agreement
with Delchamps to acquire all of the outstanding common stock of
Delchamps for $30 per share. The total value of the proposed
acquisition is approximately $228 million.
III. The Complaint
The draft complaint accompanying the proposed consent order alleges
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, the relevant line of commerce
(i.e., the product market) is the retail sale of food and grocery items
in supermarkets, and Jitney-Jungle and Delchamps are direct
competitors. Stores other than
[[Page 49688]]
supermarkets are not in the relevant product market because they 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.) are not in the relevant product market because they
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 membership club
stores in the relevant market, which offer only a limited number of
food and grocery products primarily in bulk sizes, do not have a
significant effect on market concentration.
Military commissaries are also not in the relevant product market.
Military commissaries, which are not open to the public, operate as
supermarkets for eligible military personnel and their families with
retail prices substantially below the average retail prices at
supermarkets for the same or similar items in the Gulfport-Biloxi area
in Mississippi, and in Pensacola, Florida. Retail prices at military
commissaries are not advertised and are uniform throughout the country
based on the actual cost of the item plus a nationwide uniform
surcharge determined by rules established by the Secretary of Defense.
Retail prices at military commissaries are not based on local market
conditions. Supermarkets do not price-check food and grocery products
sold at military commissaries and do not base their prices on the
retail prices at the military commissaries.
According to the draft complaint, the relevant sections of the
country (i.e., the geographic markets) in which to analyze the
acquisition of Delchamps by Jitney and Delta are the following:
a. The Gulfport-Biloxi area of Mississippi, which consists of the
parts of Hancock, Harrison, and Jackson counties that include Waveland,
Bay Saint Louis, Pass Christian, Long Beach, Gulfport, Biloxi,
D'Iberville, and Ocean Springs, and narrower markets contained therein,
including Waveland/Bay Saint Louis, Gulfport, north Gulfport, and
Biloxi/D'Iberville.
b. Pensacola, Florida, and narrower markets contained therein;
c. Hattiesburg, Mississippi, and the area immediately west of
Hattiesburg; and
d. Vicksburg, Mississippi.
According to the draft compliant, these markets are highly
concentrated, whether measured by the Herfindahl-Hirschman Index
(commonly referred to as ``HHI'') or by two-firm and four-firm
concentration ratios. The HHI is a measurement of market concentration
calculated by summing the squares of the individual market shares of
all the participants. The acquisition would significantly increase the
HHIs in each of the already highly concentrated markets.
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 geographic markets.
Jitney-Jungle and Delta's acquisition of Delchamps may reduce
competition in these markets by eliminating the direct competition
between Jitney-Jungle and Delchamps, by increasing the likelihood that
Jitney-Jungle will unilaterally exercise market power, or by increasing
the likelihood of, or facilitating, collusion or coordinated
interaction among the remaining competitors. Each of these effects
increases the likelihood that the prices of food, groceries or services
will increase, and the quality and selection of food, groceries or
services will decrease, in the relevant sections of the country.
IV. Terms of the Proposed Consent Order
The proposed consent order attempts to remedy the Commission's
competitive concerns about the acquisition. Under the terms of the
proposed consent order, the proposed Respondents must divest the ten
supermarkets listed below--five Jitney-Jungle owned and operated stores
(four of which are ``Jitney-Jungle'' stores and one is a ``Sack &
Save'' store) and five Delchamps--to Supervalu Holdings, Inc., a
wholly-owned subsidiary of Supervalu, Inc. (collectively
``Supervalu''), within either one month after the date on which the
proposed consent order becomes final, or five months after the
acceptance of the proposed consent order for public comment, whichever
is later, or to another acquirer that receives the prior approval of
the Commission within three months after the proposed consent order
becomes final. A sale to Supervalu by the proposed Respondents must be
in accordance with the agreement between Supervalu and Jitney-Jungle
dated August 29, 1997, and all subsequent amendments thereto.
If the proposed Respondents divest the ten listed supermarkets to
Supervalu within three months of the date on which the proposed consent
order becomes final, Supervalu may sell any of these supermarkets to
either R&M Foods, Inc. (``R&M Foods'') or Southeast Foods, Inc.
(``Southeast Foods''). R&M Foods currently operates 18 supermarkets,
and Southeast Foods currently operates 21 supermarkets. If Supervalu
does not sell the ten listed supermarkets to either R&M Foods or
Southeast Foods within three months of the date on which the proposed
consent order becomes final, Supervalu cannot sell the ten listed
supermarkets to anyone without the prior approval of the Commission.
Five of the ten supermarkets to be divested are located in the
Gulfport-Biloxi area; two are located in Pensacola, Florida; two are
located in Hattiesburg, Mississippi; and one is located in Vicksburg,
Mississippi. If the proposed Respondents fail to satisfy any of the
divestiture provisions, the Commission may appoint a trustee to divest
supermarkets to satisfy the terms of the proposed consent order. The
ten supermarkets to be divested are:
1. The following supermarket located in Hancock County,
Mississippi:
a. Delchamps store no. 64 operating under the ``Delchamps'' trade
name, which is located at Choctaw Plaza Shopping Center, 318 Highway
90, Waveland, MS 39576;
2. The following supermarkets located in Harrison County,
Mississippi:
a. Jitney-Jungle store no. 33 operating under the ``Jitney-Jungle''
trade name, which is located at 917 Division St., Biloxi, MS 39530;
b. Jitney-Jungle store no. 32 operating under the ``Jitney-Jungle''
trade name, which is located at 1225 Pass Road, Gulfport, MS 39501;
c. Jitney-Jungle store no. 42 operating under the ``Jitney-Jungle''
trade name, which is located at Handsboro Square Shopping Center, 1345
East Pass Road, Gulfport, MS 39501; and
d. Delchamps store no. 364 operating under the ``Delchamps'' trade
name, which is located at 11240-A Highway 49 North, Gulfport, MS 39503;
3. The following supermarkets located in Escambia County, Florida:
[[Page 49689]]
a. Jitney-Jungle store no. 54 operating under the ``Jitney-Jungle''
trade name, which is located at 4081-A East Olive Road, Pensacola, FL
32514.
b. Jitney-Jungle store no. 52 operating under the ``Sack & Save''
trade name, which is located at Brent Oaks Mall, East Brent Lane,
Pensacola, FL 32503.
4. The following supermarket located in Lamar County, Mississippi:
a. Delchamps store no. 67 operating under the ``Delchamps'' trade
name, which is located at Oak Grove Plaza Shopping Center, 4600 West
Hardy Street, Hattiesburg, MS 39401.
5. The following supermarket located in Forrest County,
Mississippi:
a. Delchamps store no. 9 operating under the ``Delchamps'' trade
name, which is located at 601 Broadway Street, Hattiesburg, MS 39401.
6. The following supermarket located in Warren County, Mississippi:
a. Delchamps store no. 115 operating under the ``Delchamps'' trade
name, which is located at Delchamps Plaza, 3046-D Indiana Avenue,
Vicksburg, MS 39180.
For a period of ten years from the date the proposed consent order
becomes final, the proposed Respondents are prohibited 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 Hancock, Harrison, Jackson, Lamar, Forrest, and
Warren counties in Mississippi, and Escambia County, Florida. This
provision does not prevent the proposed Respondents from constructing
new supermarket facilities on their own; nor does it prevent the
proposed Respondents from leasing facilities not operated as
supermarkets within the previous six months.
For a period of ten years, the proposed consent order also
prohibits the proposed Respondents from entering into or enforcing any
agreement that restricts the ability of any person that acquires any
supermarket, any leasehold interest in any supermarket, or any interest
in any retail location used as a supermarket on or after July 1, 1997,
to operate a supermarket at that site if such supermarket was formerly
owned or operated by the proposed Respondents in Hancock, Harrison,
Jackson, Lamar, Forrest, and Warren counties in Mississippi, and
Escambia County, Florida. In addition, the proposed Respondents 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 except as part of any negotiation for a
sale, sublease, assignment, or change in occupancy of such supermarket.
The proposed Respondents are required to provide to the Commission
a report of compliance with the proposed consent order within sixty
(60) days following the date the proposed consent order becomes final,
every sixty (60) days thereafter until the divestitures are completed,
and annually for a period of ten years.
The proposed Respondents also entered into an Asset Maintenance
Agreement. Under the terms of the Asset Maintenance Agreement, from the
time Jitney-Jungle acquires the outstanding stock of Delchamps until
the divestitures have been completed, the proposed Respondents must
maintain their viability, competitiveness and marketability, and must
not cause their wasting or deterioration, and cannot sell, transfer, or
otherwise impair their marketability or viability. The Asset
Maintenance Agreement specifies these obligations in detail.
V. Opportunity for Public Comment
The proposed consent order 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 consent order.
By accepting the proposed consent order subject to final approval,
the Commission anticipates that the competitive problems alleged in the
complaint will be resolved. The purpose of this analysis is to invite
public comment on the proposed consent order, including the proposed
sale of supermarkets to Supervalu, R&M Foods, and Southeast Foods, 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.
Donald S. Clark,
Secretary.
[FR Doc. 97-25185 Filed 9-22-97; 8:45 am]
BILLING CODE 6750-01-M
