[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