Notice2021-25439
The Golub Corporation and Tops Markets Corporation; Analysis of Agreement Containing Consent Orders To Aid Public Comment
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Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
November 22, 2021
Issuing agencies
Federal Trade Commission
Abstract
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.
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<title>Federal Register, Volume 86 Issue 222 (Monday, November 22, 2021)</title>
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[Federal Register Volume 86, Number 222 (Monday, November 22, 2021)]
[Notices]
[Pages 66304-66306]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[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 <a href="https://www.regulations.gov">https://www.regulations.gov</a> 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: <a href="https://www.ftc.gov/news-events/commission-actions">https://www.ftc.gov/news-events/commission-actions</a>.
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 <a href="https://www.regulations.gov">https://www.regulations.gov</a> 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 <a href="https://www.regulations.gov">https://www.regulations.gov</a>
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 <a href="https://www.regulations.gov">https://www.regulations.gov</a>, 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 <a href="https://www.regulations.gov">https://www.regulations.gov</a>--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 <a href="https://www.ftc.gov">https://www.ftc.gov</a> 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 <a href="https://www.ftc.gov/site-information/privacy-policy">https://www.ftc.gov/site-information/privacy-policy</a>.
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
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</html>Indexed from Federal Register on November 22, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.