[Federal Register Volume 60, Number 50 (Wednesday, March 15, 1995)]
[Notices]
[Pages 13988-13993]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-6342]
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FEDERAL TRADE COMMISSION
[File No. 941 0131]
Schnuyck Markets, Inc.; Proposed Consent Agreement With Analysis
to Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: In settlement of alleged violations of federal law prohibiting
unfair acts and practices and unfair methods of competition-- in
connection with Schnuck Markets' proposed acquisition of supermarkets
currently owned by National Holdings, Inc.--this consent agreement,
accepted subject to final Commission approval, would require, among
other things, the Missouri-based corporation to divest 24 stores in the
St. Louis area to Commission-approved purchasers, and would require the
respondent, for ten years, to obtain Commission approval before
acquiring an interest in a supermarket, or another entity that operates
a supermarket, in the relevant area.
DATES: Comments must be received on or before May 15, 1995.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.
FOR FURTHER INFORMATION CONTACT: Ronald Rowe, FTC/S-2105, Washington,
D.C. 20580. (202) 326-2610.
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 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
review 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)).
Agreement Containing Consent Order
The Federal Trade Commission (``Commission'') having initiated an
investigation of Schnuck Markets, Inc.'s (``Schnucks'') proposed
acquisition of certain assets of National Holdings, Inc. and certain
affiliates (``National''), and it now appearing that Schnucks,
hereinafter sometimes referred to as ``proposed respondent,'' is
willing to [[Page 13989]] 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 respondent, its duly
authorized officers and attorneys, and counsel for the Commission that:
1. Proposed respondent Schnuck Markets, Inc. is a corporation
organized, existing, and doing business under and by virtue of the laws
of the State of Missouri, with its office and principal place of
business located at 11420 Lackland Road, St. Louis, MO 63146-6928.
2. Proposed respondent admits all the jurisdictional facts set
forth in the draft of complaint.
3. Proposed respondent waives:
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.
4. 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 respondent, 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.
5. This agreement is for settlement purposes only and does not
constitute an admission by proposed respondent that the law has been
violated as alleged in the draft of the complaint, or that the facts as
alleged in the draft complaint, other than jurisdictional facts, are
true.
6. 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 Sec. 2.34 of the Commission's
Rules, the Commission may, without further notice to the proposed
respondent, (1) Issue its complaint corresponding in form and substance
with the draft of the complaint 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 respondent's address as
stated in this Agreement shall constitute service. Proposed respondent
waives any right it 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.
7. Proposed respondent has read the proposed complaint and Order
contemplated hereby. Proposed respondent understands that once the
Order has been issued, it will be required to file verified written
reports showing that it has fully complied with the Order. Proposed
respondent further understands that it 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 Schnuck Markets, Inc. means Schnuck Markets, Inc.,
its predecessors, subsidiaries, divisions, and groups and affiliates
controlled by Schnuck Markets, Inc., their successors and assigns, and
their directors, officers, employees, agents, and representatives.
B. Assets to be divested means the supermarket assets described in
Paragraph II.A. of this Order.
C. Commission means the Federal Trade Commission.
D. 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.
E. The term St. Louis MSA means the metropolitan statistical area
consisting of the following areas: in Missouri, the counties of
Franklin, Jefferson, Lincoln, St. Charles, St. Louis, Warren, and the
city of St. Louis; in Illinois, the counties of Clinton, Jersey,
Madison, Monroe, and St. Clair.
II
It is further ordered that:
A. Respondent shall divest, absolutely and in good faith, within
twelve months from the date this Order becomes final:
1. The following supermarkets located in the city of St. Louis,
Missouri:
a. National Store no. 15 located at 2700 S. Grand Avenue, St. Louis, MO
63118;
b. National store no. 30 located at 5433 Southwest Avenue, St. Louis,
MO 63139;
c. National store no. 50 located at 8945 Riverview Drive, St. Louis, MO
63137; and
d. National store no. 60 located at 1605 S. Jefferson, St. Louis, MO
63104.
2. The following supermarkets located in St. Louis County,
Missouri:
a. National store no. 26 located at 8823 Ladue Road, Ladue, MO 63124;
b. National store no. 45 located at 6 S. Old Orchard, Webster, MO
63119;
c. National store no. 46 located at 10431 St. Charles, St. Ann, MO
63074;
d. National store no. 47 located at 13041 New Halls Ferry, Florissant,
MO 63033;
e. National store no. 62 located at 421 N. Kirkwood Road, Kirkwood, MO
63122;
f. National store no. 63 located at 7434 Olive Street Road, University
City, MO 63130;
g. National store no. 77 located at 4432 Lemay Ferry Road, Mehlville,
MO 63129;
h. National store no. 85 located at 14855 Clayton Road, Chesterfield,
MO 63011;
i. Schnucks store no. 103 located at 9719 Crestwood Road, Crestwood, MO
63126;
j. Schnucks store no. 124 located at 3661 Reavis Barracks, St. Louis,
MO 63125;
k. Schnucks store no. 130 located at 10223 Lewis & Clark,
Bellefontaine, MO 63136; and
l. Schnucks store no. 195 located at 6965 Parker Road, St. Louis, MO
63033.
3. The following supermarkets located in St. Charles County,
Missouri:
a. National store no. 22 located at 850 Jungerman, St. Peters, MO
63376; and [[Page 13990]]
b. Schnucks store no. 126 located at 1355 South 5th Street, St.
Charles, MO 63301.
4. The following supermarkets located in Jefferson County,
Missouri:
a. National store no. 65 located at 1200 Sugar Creek Square, Fenton, MO
63026; and
b. National store no. 70 located at 215 Arnold Cross Road, Arnold, MO
63010.
5. The following supermarkets located in Madison County, Illinois:
a. National store no. 35 located at 1716 Vandalia Road, Collinsville,
IL 62234; and
b. Schnucks store no. 175 located at 1435 Vaughn Road, Wood River, IL
62095.
6. The following supermarkets located in St. Clair County,
Illinois:
a. National store no. 64 located at 1290 Camp Jackson Road, Cahokia, IL
62206; and
b. National store no. 80 located at 4 Market Place, Fairview Heights,
IL 62208.
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 Schnucks or National trade names, trade dress,
trade marks, service marks, and such other intangible assets that
respondent also utilizes in its business at locations other than those
listed above.
B. Respondent 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, respondent
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. Respondent 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 respondent has not divested, absolutely and in good faith and
with the Commission's prior approval, the assets to be divested within
twelve 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 section 5(1) of the Federal Trade Commission Act, 15 U.S.C.
45(1), or any other statute enforced by the Commission, respondent
shall consent to the appointment of a trustee in such action. Neither
the appointment of a trustee nor a decision not to be 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(1) of the
Federal Trade Commission Act, or any other statute enforced by the
Commission, for any failure by the respondent 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, respondent 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 respondent, which consent shall not be unreasonably withheld. The
trustee shall be a person with experience and expertise in acquisitions
and divestitures. If respondent has 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
respondent of the identity of any proposed trustee, respondent 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
divested.
3. Within ten (10) days after appointment of the trustee,
respondent 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 that divestiture can be achieved within a reasonable time, the
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. Respondent shall develop such financial or other information
as such trustee may reasonably request and shall cooperate with the
trustee. Respondent shall take no action to interfere with or impede
the trustee's accomplishment of the divestitures. Any delays in
divestiture caused by respondent 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 respondent's 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
respondent from among those approved by the Commission.
7. The trustee shall serve, without bond or other security, at the
cost and expense of respondent, 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 respondent,
such consultants, accountants, attorneys, investment bankers, business
brokers, appraisers, and other representatives [[Page 13991]] 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 respondent, and
the trustee's power shall be terminated. The trustee's compensation
shall be based at 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. Respondent 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 respondent 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, respondent shall not, without the prior
approval of 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 the St. Louis MSA.
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 the St. Louis MSA.
Provided, however, that these prohibitions shall not apply to the
construction of new facilities by respondent or the acquisition of or
leasing of a facility that has not operated as a supermarket within six
(6) months of respondent's offer to purchase or lease.
V
It is further ordered that, for a period of ten (10) years
commencing on the date this Order becomes final:
A. Respondent 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. Sec. 12(a)) acquiring any supermarket owned
or operated by respondent, any leasehold interest in any supermarket,
or any interest in any retail location used as a supermarket on or
after January 1, 1995 in the St. Louis MSA to operate a supermarket at
that site; provided however, that nothing in this Paragraph shall
prevent respondent from entering into or enforcing any agreement
requiring its 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.
B. Respondent shall not remove any equipment from a supermarket
owned or operated by respondent in the St. Louis MSA 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 respondent 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 respondent has fully
complied with the provisions of Paragraphs II or III of this Order,
respondent shall submit to the Commission verified written reports
setting forth in detail the manner and from in which it intends to
comply, is complying, and has complied with Paragraphs II and III of
this Order. Respondent shall include in its 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 contacts or
negotiations for the divestiture and the identity of all parties
contacted. Respondent shall include in its 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 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,
respondent shall file verified written reports with the Commission
setting forth in detail the manner and form in which it has complied
and is complying with this Order.
VII
It is further ordered that respondent shall notify the Commission
at least thirty (30) days prior to any proposed change in respondent
such as dissolution, assignment, sale resulting in the emergence of a
successor corporation, or the creation or dissolution of subsidiaries
or any other change in respondent 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, respondent shall permit and duly
authorized representative of the Commission:
A. Upon five days' written notice to respondent, 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 respondent
relating to any matters contained in this Order; and
B. Upon five days' written notice to respondent and without
restraint or interference from it, to interview respondent or officers,
directors, or employees of respondent in the presence of counsel.
Asset Maintenance Agreement
This Asset Maintenance Agreement (``Agreement'') is by and between
Schnuck Markets, Inc. (``Schnucks''), a corporation organized under the
laws of the State of Missouri, with its principal offices located at
11420 Lackland Road, St. Louis, MO 63146-6928, and the Federal Trade
Commission (``Commission''), an independent agency of the United States
[[Page 13992]] Government, established under the Federal Trade
Commission Act of 1914, 15 U.S.C. 41, et seq. (collectively ``the
Parties'').
Premises
Whereas, Schnucks, pursuant to an agreement dated November 23,
1994, agreed to purchase certain assets of National Holdings, Inc. and
certain affiliates (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
Sec. 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 Schnucks, 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, Schnucks entering into this Agreement shall in no way be
construed as an admission by Schnucks that the Acquisition is illegal;
and
Whereas, Schnucks understands 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. Schnucks agrees 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. 53(b), and obtains a temporary restraining
order or preliminary injunction blocking the proposed Acquisition,
Schnucks will be free to close the Acquisition after 11:59 p.m., March
8, 1995.
3. Schnucks agrees that from the date this Agreement is accepted
until the earliest of the dates listed in subparagraphs 3.a-3.b it 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 Sec. 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 Schnucks acquires the Assets until the divestiture
set out in the Consent Order has been completed, Schnucks shall
maintain the viability, competitiveness and marketability of the
Assets, and shall not cause the wasting or deterioration of the Assets,
nor shall it sell, transfer, encumber or otherwise impair their
marketability or viability.
5. Should the Commission seek in any proceeding to compel Schnucks
to divest itself of the Assets or to seek any other injunctive or
equitable relief, Schnucks 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. Schnucks also waives 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 Schnucks to its principal
offices, Schnucks will permit any duly authorized representative or
representatives of the Commission:
a. Access during the office hours of Schnucks, 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 Schnucks relating to compliance with
this Agreement; and
b. Upon five (5) days' notice to Schnucks and without restraint or
interference from them, to interview officers or employees of Schnucks,
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 Schnuck Markets, Inc. (``Schnucks'') an agreement
containing a proposed consent order. The agreement is designed to
remedy anticompetitive effects stemming from Schnucks' acquisition of a
number of supermarkets owned by National Holdings, Inc. and certain
affiliates (``National'').
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 November
23, 1994, Schnucks agreed to acquire supermarkets owned by National in
Missouri and Illinois. 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, Schnucks and National are direct
competitors for the retail sale of food and grocery items in
supermarkets, or narrower product markets contained therein, in the St.
Louis MSA, or narrower geographic markets contained therein. The St.
Louis MSA consists of the Missouri counties of Franklin, Jefferson,
Lincoln, St. Charles, St. Louis, Warren; the City of St. Louis; and the
Illinois counties of Clinton, Jersey, Madison, Monroe, and St. Clair.
[[Page 13993]] According to the draft complaint, these markets are
highly concentrated and entry is difficult or unlikely. Schnucks'
acquisition of National may reduce competition in these markets by
eliminating the direct competition between Schnucks and National, by
increasing the likelihood that Schnucks 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, Schnucks must divest 24 supermarkets
within twelve months, to a purchaser approved by the Commission. If
Schnucks fails to satisfy the divestiture provisions, the Commission
may appoint a trustee to divest supermarkets to satisfy the terms of
the order. The 24 supermarkets to be divested are:
1. The following supermarkets located in the city of St. Louis,
Missouri:
a. National store No. 15 located at 2700 S. Grand Avenue, St. Louis, MO
63118;
b. National store No. 30 located at 5433 Southwest Avenue, St. Louis,
MO 63139;
c. National store No. 50 located at 8945 Riverview Drive, St. Louis, MO
63137; and
d. National store No. 60 located at 1605 S. Jefferson, St. Louis, MO
63104.
2. The following supermarkets located in St. Louis County,
Missouri:
a. National store No. 26 located at 8823 Ladue Road, Ladue MO 63124;
b. National store No. 45 located at 6 S. Old Orchard, Webster, MO
63119;
c. National store No. 46 located at 10431 St. Charles, St. Ann, MO
63074;
d. National store No. 47 located at 13041 New Halls Ferry, Florissant,
MO 63033;
e. National store No. 62 located at 421 N. Kirkwood Road, Kirkwood, MO
63122;
f. National store No. 63 located at 7434 Olive Street Road, University
City, MO 63130;
g. National store No. 77 located at 4432 Lemay Ferry Road, Mehlville,
MO 63129;
h. National store No. 85 located at 14855 Clayton Road, Chesterfield,
MO 63011;
i. Schnucks store No. 103 located at 9719 Crestwood Road, Crestwood, MO
63126;
j. Schnucks store No. 124 located at 3661 Reavis Barracks, St. Louis,
MO 63125;
k. Schnucks store No. 130 located at 10223 Lewis & Clark,
Bellefontaine, MO 63136; and
l. Schnucks store No. 195 located at 6965 Parker Road, St. Louis, MO
63033.
3. The following supermarkets located in St. Charles County,
Missouri:
a. National store No. 22 located at 850 Jungerman, St. Peters, MO
63376; and
b. Schnucks store No. 126 located at 1355 South 5th Street, St.
Charles, MO 63301.
4. The following supermarkets located in Jefferson County,
Missouri:
a. National store No. 65 located at 1200 Sugar Creek Square, Fenton, MO
63026; and
b. National store No. 70 located at 215 Arnold Cross Road, Arnold MO
63010.
5. The following supermarkets located in Madison County, Illinois:
a. National store No. 35 located at 1716 Vandalia Road, Collinsville,
IL 62234; and
b. Schnucks store No. 175 located at 1435 Vaughn Road, Wood River, IL
62095.
6. The following supermarkets located in St. Clair County,
Illinois:
a. National store No. 64 located at 1290 Camp Jackson Road, Cahokia, IL
62206; and
b. National store No. 80 located at 4 Market Place, Fairview Heights,
IL 62208
For a period of ten years from the date the order becomes final,
the order also prohibits Schnucks from acquiring, without prior
Commission approval, supermarket assets located in, or any interest
(such as stock) in any entity that owns or operates a supermarket
located in, the St. Louis MSA. This does not prevent Schnucks from
constructing new supermarket facilities on its own; nor does it prevent
Schnucks from leasing facilities not operated as supermarkets within
the previous six months.
For a period of ten years, if Schnucks sells or leases a
supermarket to another person, Schnucks may not enter into or enforce
any agreement that would restrict the ability of that person to operate
a supermarket. In addition, subject to certain exceptions, Schnucks may
not remove any equipment from a supermarket it owns or operates prior
to a sale, sublease, assignment, or change in occupancy.
The respondent is required to provide to the Commission a report of
compliance with the order within sixty (60) days following the date the
order becames final, every sixty (60) days thereafter until the
divestitures are completed, and annually for a period of ten years.
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.
Donald S. Clark,
Secretary.
Concurring Statement of Commissioner Mary L. Azcuenaga
Re: Schnuck Markets, Inc., File No. 941-0131; Schwegmann Giant Super
Markets, Inc., File No. 941-0130
The two complaints allege geographic markets comprising ``the St.
Louis MSA, and narrower markets contained therein'' and ``metro New
Orleans, Louisiana area, which consists of the parishes of Orleans,
Jefferson, and St. Bernard, and narrower markets contained therein.''
Although I question the board geographic markets alleged, the
investigational record contains sufficient information to support a
finding of reason to believe with respect to small, discrete geographic
markets located within the broad regions alleged in the complaint, and
the stores to be divested were selected with a view to remedying
competitive concerns in the small, discrete markets.
In addition, the complaints allege as the product market ``the
retail sale of food and grocery products in supermarkets, and narrow
markets contained therein.'' A serious argument can be made that the
market should include sales of food and groceries in certain stores
other than traditional supermarkets. Since the investigational record
suggests that the concentration is high even if additional sales are
included in the market, the issue need not be resolved at this time.
Accordingly, I concur in the decision to accept the consent agreements
for publication.
[FR Doc. 95-6342 Filed 3-14-95; 8:45 am]
BILLING CODE 6750-01-M