Are Retailing Mergers Anticompetitive?

An Event Study Analysis

Abstract

We examine the abnormal returns of rival firms to determine whether four retailing mergers that

occurred during the late 1980s reduced competition. We use the stock returns of retailers in

geographic markets unaffected by the merger to control for the efficiency-signaling effect of the

merger. Using this methodology, we find that rival firms experienced positive abnormal returns

from May Company’s 1986 acquisition of Associated Dry Goods and American Stores’ 1988

acquisition of Lucky Stores. These results offer some evidence that retailing mergers that lead to

large increases in concentration in already concentrated markets may lessen competition and lead

to higher product market prices.

John David Simpson

Federal Trade Commission

and

Daniel Hosken

Federal Trade Commission

January 1998
1

 United States v. Von’s Grocery Company 384 U.S. 270 (1966).

2

 See "May Stores to sell Associated Dry Goods unit in Pittsburgh," Wall Street Journal,

September 25, 1986, p. 55. May Department Store Company sold these stores to settle an

antitrust suit brought by the city of Pittsburgh, Allegheny County, and the state of Pennsylvania. 

The FTC did not challenge this acquisition.

1

I) Introduction

Antitrust enforcement of retailing mergers has varied over time. In the 1960s, the

antitrust agencies and the courts pursued a very aggressive antitrust policy. For example, the

Supreme Court blocked a 1960 merger between Von’s Grocery and Shopping Bag Food Stores

that would have given the merged firm a 7.5 percent share of the grocery retailing business in Los

Angeles.1 In contrast, the antitrust agencies followed a much more relaxed antitrust policy in the

1980s. For instance, the Federal Trade Commission did not challenge May Department Stores

Company’s 1986 acquisition of Associated Dry Goods which would have given the combined

firm control of nearly all of the traditional department stores in the Pittsburgh area.2 More

recently, the antitrust agencies and the courts have adopted a more moderate position with

respect to retailing mergers. In 1997, a district court granted the FTC a preliminary injunction

blocking the proposed merger of Staples and Office Depot, a merger that would have reduced the

number of national office supply firms from three to two.

Existing empirical work provides only limited guidance in selecting the appropriate level

of antitrust enforcement in the retailing industry. Several researchers (e.g., Cotterill (1986)) have

examined the relationship between price and concentration across geographic areas and have

found that supermarket prices tend to be higher in more concentrated markets. This result, which

suggests that supermarket mergers are harmful to consumers, should be viewed with caution for
2

at least two reasons. First, many of the factors that affect supermarket prices (e.g., wage rates,

per capita income, economies of scale) are correlated with market concentration. For instance,

supermarkets in small cities, where concentration tends to be higher, may have high costs

because they are unable to attain economies of scale. Thus, the estimated relationship between

price and concentration will be biased unless the statistical model correctly accounts for these

factors. In fact, Anderson (1990) notes that the price-concentration studies of the supermarket

industry generally have failed to adequately account for cost and quality differences across

metropolitan areas. Second, price-concentration studies fail to account for the endogeneity of

market structure: While market concentration affects the price that a supermarket sets, the price

that a supermarket sets also affects market structure. Failing to account for the endogeneity of

market structure yields a biased estimate of the relationship between price and market structure

(Schmalensee (1988), Bresnahan (1988)).

This study seeks to provide some additional guidance in determining whether retailing

mergers harm consumers. If a merger is expected to lead to higher product prices, then investors

should bid up the price of rival firms’ stock in anticipation of higher profits in this market. Thus,

we potentially can identify those retailing mergers that the stock market believed would lead to

higher product prices by examining changes in the share price of rival firms following the

announcement of a merger. We can then relate these mergers to the Herfindahl-Hirschman index

(HHI) computed for the area or areas affected by the merger. In some cases, the geographic areas

for which we compute the HHI’s will be broader than the geographic market that would be

defined using the Department of Justice and Federal Trade Commission 1992 Merger Guidelines. 

Nevertheless, we believe that relating the HHI statistics for these areas to an indicator of
3

 Eckbo (1983) and Stillman (1983) first used the event study methodology to analyze

the competitive effects of mergers. Others (e.g., Mullin, Mullin, and Mullin (1995)) have since

used this methodology to examine either specific mergers or mergers in specific industries. 

Chevalier (1995) uses the event study methodology to study the effect of leveraged

buyouts on a competitor’s share price in the supermarket industry. She finds that the share price

of competitors rose when leveraged buyouts are announced. From this, she concludes that

leverage increases lead to softer competition in the supermarket industry.

3

anticompetitive harm gives a rough indication of what change in concentration across a broad

region will lead to higher product prices.

This study examines four retailing mergers. Rival firms realized economically

significant, positive abnormal returns in two retailing mergers that increased the HHI by several

hundred points resulting in a post-merger HHI of roughly 2500. Rival firms did not realize

economically significant, positive abnormal returns in two retailing mergers in which smaller

changes in the HHI led to post-merger HHI’s below 2000. The rest of the paper is structured as

follows. Section II explains the event study methodology that we use in more detail. Section III

describes the data and the sample. The selection of event dates is discussed in Section IV. 

Results are presented in Section V, and Section VI concludes.

II) Event Study Methodology3

The event study methodology assumes that stock markets swiftly incorporate new

information in valuing a firm’s stock. Given this, the announcement of a merger between two

firms would convey information that would prompt investors to bid up the price of a competing

firm’s stock under any of the following four conditions. First, a competitor would benefit if an

anticompetitive merger led to higher product prices and thus higher profits. Second, competitors

would benefit if a merger revealed previously unknown opportunities for them to obtain
4

 We are indebted to Arthur Strong for this point.

5

 Although event studies of past mergers and acquisitions can provide some information

about the type of mergers that may lead to price increases, using event studies of this type to

evaluate pending acquisitions may be problematic. If stock traders believe that an

anticompetitive acquisition will be blocked if rival firms realize large positive abnormal returns,

then they will have little incentive to buy the rival firms’ stock. In this case, rival firms would be

much less likely to receive abnormal returns when anticompetitive mergers are announced.

4

efficiencies through merger. Third, competitors could benefit if the merging firms would be

forced to divest assets at a discount in order to satisfy antitrust requirements. Fourth, competitors

would benefit if the merged firm attained a scale that enabled it to profitably undertake an

investment that benefits the entire industry (e.g., an advertising campaign).4 Thus, event studies

can conclude that a merger is anticompetitive if the share price of a competitor increases when

the merger is announced and if we can discount the efficiency explanation, the divestiture

explanation, and the free-rider explanation.5

Because many retailers serve only local or regional markets, we can largely control for the

explanation that a retailing merger signals previously unknown opportunities for other firms to

obtain efficiencies from mergers. If a retailing merger signals that retailers in any geographic

region can gain efficiencies through mergers, then all retailers with stores of a similar format

should see their share price increase. Thus, we can use the share price response of retailers in

markets unaffected by the merger to control for any nationwide efficiency-signaling effect of the

merger. Although we cannot explicitly control for any signaling of region-specific efficiencies

from mergers, we do not see this as a major problem for two reasons. First, the efficiency that

rival firms could also exploit presumably relates to economies of scale. This is unlikely to be an
6

 In a prominent recent case, the proposed Staples/Office Depot merger, the trade press

speculated that Office Max would have been able to acquire a number of divested stores at a

substantial discount if the Federal Trade Commission (FTC) and the merging parties reached a

settlement. However, in this case, the FTC’s brief (Plaintiff’s Memorandum of Points and

Authorities in Support of Motion for Temporary Restraining Order and Preliminary Injunction)

suggested that the FTC would only have been satisfied if the merged firm divested the stores to

Office Max. Hence, in this case, the trade press could have reasonably concluded that Office

Max could have purchased the divested stores at a discount. In contrast, in the cases analyzed in

this study, competition among several potential purchasers seemingly would have ensured that

divested stores would not have been sold at a substantial discount.

5

efficiency that is region-specific. Second, in one of the mergers that we consider, additional

evidence indicates that the merger was unlikely to have signaled region-specific efficiencies. 

Although we cannot explicitly control for the divestiture effect, we believe that we can

largely discount it. The divestiture effect requires that investors believe that a competitor has a

significant probability of purchasing divested stores at a large discount. However, in many cases,

mergers do not lead to divestitures. Where mergers do lead to divestitures, the divested assets

are often purchased by a firm outside of the market. Finally, even where a competitor does

purchase the divested assets, competition among potential purchasers likely limits the amount of

any discount. Given this, we believe that the divestiture effect will increase a competitor’s share

price only in rare circumstances.6

We also cannot explicitly account for the free-rider effect. Rival firms in the retailing

industry might be able to free-ride on the merged firm’s investment in technology. However, the

mergers that we examine probably did not enhance the development of new technologies (e.g.,

scanner systems, theft deterrence systems) since none of the mergers created the largest

nationwide firm. Rival firms in the retailing industry might also be able to free-ride on a

competitor’s advertising. However, a rival firm would only benefit from an increase in the
7

 We added Von’s Grocery’s 1988 acquisition of the Southern California operations of

Safeway Supermarkets even though it was not listed by Mergerstat. Mergerstat lists only those

acquisitions that involve 10 percent of the selling firm’s assets. We believe that this acquisition

failed this criteria.

6

merged firm’s advertising to the extent that this increase in advertising acted to increase market

demand rather than shift market share from the rival firms to the merged firm. Among

supermarkets this seems unlikely. Since supermarkets constitute such a large share of grocery

retailing, increased advertising presumably has little scope to increase market demand. While

increasing market demand seems somewhat more likely among department stores, in the one

department store merger that we consider, additional evidence suggests that the merged firm did

not significantly increase its advertising after the merger.

III) Data and Sample

We use W.T. Grimm’s Mergerstat to identify large transactions in the retailing sector.7 In

order to examine those mergers that would have been most likely to reduce competition, we draw

our sample from the set of transactions that occurred between 1984 and 1993. In 1983, the

Federal Trade Commission (FTC) dismissed its complaint against the Grand Union Company. In

dismissing its complaint, the FTC found that the product market included all grocery stores and

concluded that entry barriers were relatively low at least in much of the Southeastern United

States. We believe that this decision signaled a less restrictive period of antitrust enforcement of

retailing mergers. Conversely, during the mid-1990s, antitrust enforcement of retailing mergers

appears to have become more stringent. In 1996, a threat of an antitrust challenge prompted Rite

Aid and Revco to abandon their proposed merger. In 1997, the FTC obtained a preliminary
8

 McAfee and Williams (1988) note that rival firms are unlikely to have positive

abnormal returns when an anticompetitive merger is announced if they receive only a small

amount of their total revenue from markets affected by the merger.

7

injunction against the proposed merger of Staples and Office Depot, which prompted those two

firms to abandon their merger. The year 1993 is chosen to predate this shift in enforcement. 

We further restrict our sample to supermarket and department store mergers for two

reasons. First, entry barriers into the supermarket and department store businesses should be

higher than for other types of retailing: Because supermarkets and department stores tend to be

larger than most other types of stores, identifying and developing sites for these stores is probably

more difficult than identifying and developing sites for other stores. Second, because

supermarkets and department stores are relatively large, we can obtain data on the location of the

various supermarkets and department stores at the time of past transactions. 

Of the remaining transactions, we eliminate all leveraged buyouts and all transactions in

which there was not a significant product market or geographic market overlap. This leaves

seven transactions. To conduct event studies for these transactions, we must first identify the

geographic overlaps between the two merging firms and then identify a publicly traded

competitor that obtained a significant share of its revenue from the overlap area.8 To do this, we

use Supermarket News’ Annual Distribution Study of Grocery Store Sales for supermarket

mergers and the Chain Store Guide Directory for department store mergers. 

We dropped A&P’s 1988 purchase of Borman’s and Miller Tabak Hirsch & Co.’s 1989

purchase of Grand Union because no publicly traded competitor obtained a significant share of

its revenue from the overlap area. We also dropped Campeau Corporation’s 1988 acquisition of

Federated Department Stores from our sample. Because Federated Department Stores was the
8

object of a bidding war between Campeau Corporation and Macy’s Department Stores, it is

difficult to infer on what date the market believed particular geographic markets would become

more concentrated. This left the four mergers analyzed in this study: May Department Stores

Company’s 1986 acquisition of Associated Dry Goods, Great Atlantic & Pacific Tea Company’s 

1986 acquisition of Waldbaum Inc., Von Companies’ 1987-1988 acquisition of Safeway’s

Southern California stores, and American Stores’ 1988 acquisition of Lucky Stores Inc. Thus,

while we set out to study all department store and supermarket mergers that took place between

1984 and 1993, our selection process resulted in a sample of four mergers that take place

between 1986 and 1988.

We used the Wall Street Journal Index to identify the announcement date of a particular

transaction and used the Center for Research in Security Prices (CRSP) NYSE database to obtain

stock return data. We supplemented this database with stock returns for Nordstrom and

Waldbaum’s, two firms listed on the NASDAQ exchange, from Standard & Poor’s Daily Stock

Price Record. For these two companies, we computed the returns based on the mean of bid and

ask prices.

IV) Event Selection

We identify event dates in the following way. For each acquisition in our sample, we first

collect a list of dates on which the Wall Street Journal reported new information about the

acquisition. Since previous studies have found that target firms realize large positive abnormal

returns when acquisitions are announced (e.g. Jarrell and Poulson (1989)), we can use the target

firm’s abnormal returns to identify those dates when new information about the acquisition
9

 For example, in our analysis of Great Atlantic & Pacific Tea Company’s acquisition

of Waldbaum Inc., two articles appeared in the Wall Street Journal discussing the merger, one on

November 28, 1986 and the other on December 1, 1986. We estimated the market model

(equation 1) for Waldbaum including indicator variables for both potential event dates:

November 28 and December 1. Waldbaum earned a large statistically significant (70.5%)

abnormal return on November 28, and no statistically significant abnormal return on December

1. Thus, we concluded that important information about the merger reached the market on

November 28 while no important information about the merger reached the market on December

1. Hence, in estimating the market model for the rival firm, Supermarket General Company, we

only included a dummy variable for November 28.

10 The Wall Street Journal reported American Stores’ tender offer for Lucky Stores on

March 23, 1988. Lucky Stores realized an abnormal return of 44.8 percent on March 22, 1988.

9

reached the market. Therefore, we use the market model to identify those dates on which the

target firm experienced large and statistically significant abnormal returns from the list of dates

from the Wall Street Journal. This pared list of dates constitutes our event dates in analyzing the

abnormal returns to rivals.9 

We visually checked the abnormal returns of the acquired firm to identify any dates where

news of the acquisition clearly reached the market prior to the publication of the Wall Street

Journal article. In the one case where this happened, we added this date as an event date.10 We

also checked the Wall Street Journal to see whether any additional information (e.g., an earnings

announcement) might have affected a rival’s share price on the event dates that we examine. 

Footnotes indicate the few cases where the Wall Street Journal reported such additional

information.
10

(1) Rit ' ai%ßiRmt%?iRRt%j ditDit%eit

V. Results

We compute the abnormal share price returns to rival firms using a modified version of

the market model used by Eckbo (1983), Stillman (1983) and others.

where:

Rit is the daily rate of return to firm i;

Rmt is the daily value-weighted return for stocks on the New York Stock Exchange;

RRt is the daily rate of return for an equal value weighted retailing index comprised of firms with 

operations in geographic markets unaffected by the merger. RRt should control for any 

efficiency-signaling effect of a merger. (The firms in this index are listed in Appendix A

for each acquisition studied.);

Dit is a dummy variable with a value of 1 if an event occurs on day t; and

et is a serially uncorrelated random disturbance.

We estimate equation (1) using data from the interval beginning two hundred trading days

before the first event date and ending ten trading days after the last event date. Because the

window in which events takes place varies for each merger, the number of observations used in

each set of regressions varies.

The estimated coefficient for Dit measures a stock’s abnormal return on a particular event

day. We present two measures of statistical significance for these coefficients. The first is a tstatistic based on the standard errors computed assuming that abnormal stock returns are

normally distributed. This measure may understate the likelihood of Type 1 error since Fama
11 We would like to thank Sanjai Bhagat for suggesting this approach.

12 The variance of excess returns may increase during periods in which significant new

information reaches the market (e.g., Brown and Warner (1985)). Hence, the technique

described above might understate the p-value corresponding to the event period. To address this

concern, we also calculated the frequency distribution of abnormal returns corresponding to the

event period. These p-values, however, do not substantially differ from the p-values computed

for the previous period.

11

(1

)

) Rit ' ai%ßiRmt%?iRRt%eit

(1976) and Brown and Warner (1985) have found that abnormal returns to a single stock tend to

have more dispersion about the mean than a normal distribution would predict. 

The second measure is based on the percentile that the coefficient corresponds to in the

empirical distribution of excess returns of the stock.11 For the interval four hundred trading days

before the event date to two hundred and one trading days before the event date, we estimate a

slightly modified version of the market model in which we do not control for any event dates (1').

We then determine what percentile the estimated excess return (Dit) in equation (1) corresponds

to in the empirical distribution of excess returns generated by equation (1'). The difference of 1

minus this percentile ranking corresponds to the p-value for a one-sided hypothesis test that the

coefficient is less than or equal to zero. These p-values are reported along with our other

results.12 

A. May Department Stores Company’s acquisition of Associated Dry Goods (1986)

May Department Stores Company’s (May) 1986 acquisition of Associated Dry Goods

substantially increased concentration among department stores in the greater Pittsburgh, Denver,

and St. Louis areas, and in Southern California. In Pittsburgh, the acquisition would have left no
13 May Department Stores agreed to divest Associated Dry Goods’s Joseph Horne

department store division to settle an antitrust lawsuit brought by Pittsburgh, Allegheny County,

and the state of Pennsylvania. 

14 Buffum’s is not publicly traded. 

12

competing publicly-traded department stores.13 In Denver, Joslins, which is owned by Mercantile

Stores Company, competed with the two merging chains. Mercantile Stores Company, however,

does not appear to be a suitable candidate for study because it apparently received less than 10

percent of its revenue from areas affected by the acquisition. Although Dillard Department

Stores competed with the two merging chains in St. Louis, Dillard Department Stores is also a

poor candidate for study because it apparently received less than 10 percent of its revenue from

areas affected by the acquisition.

In Southern California, the acquisition increased concentration as measured by the HHI

from 1937 to 2615 in a product market that includes all traditional department stores but

excludes mass merchandisers such as Sears, J.C. Penney, and K Mart, and discount department

stores such as WalMart (see Tables 1 and 2 on the following page). At the time of the

acquisition, Nordstrom, Carter Hawley Hale, Federated Department Stores (Federated), and

Buffum’s all competed with the merging chains. Of these competitors, Nordstrom, Carter

Hawley Hale, and Federated appear to be good candidates for study:14 In 1986, 40 percent of

Nordstrom’s store square footage was in Southern California, and Carter Hawley Hale derived

about 40 percent of its revenue from its Broadway division, which is located in Southern

California. Two of Federated’s fifteen divisions (Bullock’s and I. Magnin) had significant 
15 Source: 1986 Chain Store Guide, 1994 Nordstrom 10-K, Fairchild’s.

16 Includes Robinson’s, May, Carter Hawley Hale (Broadway), Nordstrom, Buffums,

Bullocks, I Magnin, Boston Stores, Harris, and Walker Scott Company. 

17 Sales are estimated by multiplying the number of stores a company has in Southern

California by the chain’s average sales per store in 1986.

13

Table 1

Department Stores in Southern California15

Robinsons May Carter

Hawley Hale

Nordstrom Federated Total

Dept. Stores16

Los Angeles County 12 13 14 5 21 78 

San Diego County 2 5 4 4 3 24

Orange County 4 6 6 2 10 35

San Bernardino

County 

0 2 2 1 0 7

Riverside County 1 1 1 0 3 11

Ventura County 1 2 2 0 1 6

Total 20 31 29 12 38 161

Table 2

Market Shares in Southern California based on 1986 Sales17

 Sales (millions) Share

Robinsons (Associated Dry Goods) 524 16.0

May Company 696 21.2

Broadway (Carter Hawley Hale) 707 21.6

Nordstrom 281 8.6

Buffum’s 110 3.4

Bullock’s & I. Magnin (Federated) 854 26.0

Boston Stores (Carson Pirie Scott & Co) 15 0.5

Harris Department Stores 50 1.5

Walker Scott Company 41 1.2

pre-merger HHI 1937

change in HHI 678

post-merger HHI 2615
18 As described earlier, the abnormal returns for this empirical distribution are drawn

from the period 400 to 201 trading days prior to the first event date.

14

operations in Southern California. If May’s acquisition of Associated Dry Goods reduced

competition among department stores, then the share price of Nordstrom, Carter Hawley Hale,

and Federated should increase on those dates when new information suggests the acquisition is

more likely to occur.

Table 3 lists all of the Wall Street Journal articles relating to May’s acquisition of

Associated Dry Goods. Significant new information apparently reached the market on two days.

On June 23, the day the Wall Street Journal reported that May Department Stores planned to

acquire Associated Dry Goods, Associated Dry Goods had an abnormal positive return of 41.5

percent. On July 17, the day the Wall Street Journal reported that Associated Dry Goods

accepted May’s offer, Associated Dry Goods had an abnormal positive return of 3.8 percent.

Table 4 lists the abnormal returns for Nordstrom, Carter Hawley Hale, and Federated on

June 23 and July 17. On June 23, Nordstrom realized an abnormal return of 4.3 percent, which is

statistically significant at the 1 percent level, Carter Hawley Hale realized an abnormal return of

4.1 percent, which is statistically significant at the 5 percent level, and Federated realized an

abnormal return of 2.7 percent, which is statistically significant at the 5 percent level. These

abnormal returns also appear to be extreme values in the empirical distribution of these stocks’

abnormal returns. For each of these firms, these abnormal returns score above the 98th percentile

in the empirical distribution of abnormal returns.18 If the empirical distribution corresponds to

the actual sampling distribution of each stock, we could reject at the 2 percent level the null 
15

Table 3

Wall Street Journal articles: May Department Stores acquisition of Associated Dry Goods

6/23/86 WSJ May Department Stores to acquire Associated Dry Goods for $2.7 billion

6/25/86 WSJ May Department Stores’ bid of $2.7 billion for Associated Dry Goods will continue indefinitely

6/26/86 WSJ May Department Stores may acquire Associated Dry Goods in hostile tender offer of $60 per share

6/27/86 WSJ May Department Stores raises bid for Associated Dry Goods to $60 per share

7/2/86 WSJ Associated Dry Goods rejects as inadequate $2.4-2.7 billion takeover offer

7/11/86 WSJ May Department Stores may acquire Associated Dry Goods for $2.7 billion but talks are stalled

7/15/86 WSJ Associated Dry Goods would accept sweetened takeover bid of $2.77 billion

7/17/86 WSJ Associated Dry Goods accepts May Stores’ bid

9/4/86 WSJ May Department Stores may acquire Associated Dry Goods; bid rejected by City of Pittsburgh

9/25/86 WSJ May Department Stores to sell Joseph Horne division of Associated Dry Goods after it acquires

Associated Dry Goods

11/18/86 WSJ May Department Stores will sell Joseph Horne to investor group for undisclosed amount.
19 On this date, a Wall Street Journal article reported that Carter Hawley Hale retained

Morgan Stanley to find a buyer for its John Wanamaker department store chain. As a result,

Standard & Poor’s affirmed its triple B minus rating on the firm’s debt.

16

Table 4

Estimated Event Response: Carter Hawley Hale, Nordstrom, and Federated

Carter Hawley Hale Nordstrom Federated

intercept -0.000022

(.0013)

0.0011

(0.0011)

0.00026

(0.00086)

market return 0.97***

(0.18)

 0.71***

(0.16)

 1.02***

(0.12)

department store index 0.19*

(0.11)

0.13

(0.098)

 0.18**

(0.073)

6/23/86 0.041**

(.019)

[.005]

 0.043***

(0.017)

[.00]

 0.027**

(0.013)

[.02]

7/17/87 0.006819

(.019)

[.24]

0.014

(0.017)

[.13]

0.0066

(0.013)

[.25]

R-squared .1621 .1325 .3131

Observations 229 224 229

standard errors in parentheses.

*** significant at 1 percent level 

** significant at 5 percent level

* significant at 10 percent level

p-values corresponding to residuals in period 400 to 201 trading days before first event

are listed in brackets
20 This estimate is based on figures in recent 10K reports of Carter Hawley Hale,

Nordstrom, Dillard Department Stores, and May Department Stores Company.

21 This figure is computed using Carter Hawley Hale’s and Nordstoms’ 1986 sales, the

percentage of their sales that are likely from Southern California, and their market share in

Southern California.

17

hypothesis that no event that would lead to positive abnormal returns occurred on June 23, 1986. 

None of the three rival firms had statistically significant abnormal returns on July 17.

The event study indicates that Nordstrom and Carter Hawley Hale both had an abnormal

positive return of roughly 4 percent when news of May’s acquisition of Associated Dry Goods

reached the stock market. This increase in share price is consistent with a small, short-lived

increase in department store prices. Since the net income of department stores appears to be

about four percent of net sales,20 a one percent increase in department store prices would

represent a 25 percent increase in profit. Since Carter Hawley Hale and Nordstrom would realize

this added profit on the 40 percent of their operations that were in Southern California, they

would realize a 10 percent increase in company profits. This 10 percent increase in profit would

explain the four percent increase in share price at Carter Hawley Hale and Nordstrom if it

persisted for three years assuming a 15 percent discount rate and assuming that the stock market

believed that May’s tender offer would succeed with certainty. Traditional department stores in

Southern California appear to have had sales of roughly 7.5 billion dollars in 1986.21 Given this,

a one percent price increase lasting three years amounts to roughly 225 million dollars.

Finally, as we noted earlier, our empirical test does not differentiate between positive

abnormal returns that are due to an expectation of higher product market prices and positive

abnormal returns that are due to an expectation that other retailers in the geographic region can
22 See May Department Stores Company 10-K for the fiscal year ending 1/29/94.

23 In 1987, roughly one-third of May’s department stores were in markets where the

acquisition would have increased concentration (i.e., Pittsburgh, St. Louis, Denver, Southern

California). Thus, we would expect to see a significant increase in advertising if the acquisition

enabled May to realize economies of scale in advertising.

24 See May Department Stores Company 10-K for the fiscal year ending 1/30/88.

18

obtain efficiencies through mergers. In this merger, however, some additional evidence suggests

that the acquisition probably did not signal region-specific efficiencies from mergers. First, May

did not fully integrate the operations of its May Company and Robinson’s chains until early

1993,22 six years after the acquisition. If integration would have led to large efficiencies, then the

two chains presumably should have been combined sooner. Second, since 1986, little further

consolidation occurred in this market. Nordstrom, The Broadway, and Bullocks still operate as

separate department store chains. 

Our empirical test also does not differentiate between positive abnormal returns that are

due to an expectation of higher product market prices and positive abnormal returns that are due

to an expectation that rival firms could free-ride on increased advertising expenditures by May. 

However, we can largely discount this free-rider effect since other evidence suggests that May

did not substantially increase its advertising expenditures after its acquisition of Associated Dry

Goods.23 May spent $337 million in 1985 and $345 million in 1987 on advertising and sales

promotion. This represented roughly 3.9 percent of net retail sales in 1985 and 3.3 percent of net

retail sales in 1987.24 
25 This does not, however, rule out the possibility that A&P’s acquisition of Waldbaum

might have led to higher grocery prices in a small number of geographic locations within this

metropolitan area. 

19

B. Great Atlantic & Pacific Tea Company’s acquisition of Waldbaum Inc. (1986)

In December 1986, A&P acquired Waldbaum. In the New York/New Jersey metropolitan

area, this acquisition increased A&P’s share of supermarket sales from about 16 percent to about

27 percent and increased the HHI from 1075 to 1337 (See Table 5). Of course, to the extent that

some New York/New Jersey metropolitan supermarkets only serve certain geographic areas,

these figures understate or overstate both A&P’s post-merger market share and market

concentration in certain geographic areas. 

Supermarket General Corporation, which owns the Pathmark chain, is the only firm

competing against A&P and Waldbaum in the New York metropolitan area for which we could

obtain data on stock prices. Since Supermarket General Corporation operated 84 of its 200 stores

in the New York Metropolitan area, its share price should have increased if A&P’s acquisition of

Waldbaum reduced supermarket competition. 

Two articles in the Wall Street Journal discussed this acquisition. A November 28 article

stated that A&P seeks to buy Waldbaum, and a December 1 article stated that A&P will acquire

Waldbaum. Waldbaum experienced an abnormal return of 70.5 percent on November 28 and

experienced an abnormal return of 0 percent on December 1. Table 6 presents Supermarket

General’s abnormal return for the November 28, 1986 event date. The abnormal return is

negative but not statistically significant. This suggests that stock market participants did not

expect that A&P’s acquisition of Waldbaum would lead to higher grocery prices in the broad

New York/New Jersey metropolitan area.25
26 Source: Supermarket News 1986 Distribution Study of Grocery Store Sales

20

Table 526

Market Shares in New York/New Jersey metropolitan statistical area

(leading supermarket chains and voluntary groups)

A&P (includes Shopwell) 16.1

Waldbaum 10.9

Pathmark 17.1

ShopRite 13.6

Foodtown 10.2

Grand Union 5.5

Key Food 5.5

King Kullen 4.1

Acme 2.7

Gristedes 2.7

First National 2.7

Sloan’s 1.4

Royal Farms 1.4

Met 2.7

Krasdale C Town 2.0

Associated 1.4

 pre-merger HHI = 1075

 change in HHI = 262

post-merger HHI = 1337
21

Table 6

Estimated Event Response: Supermarket General

Supermarket General

Intercept -0.00090

(0.0011)

market return 0.54***

(0.18)

grocery index 0.28 

(0.19)

announcement date (11/28/86) -0.019

(0.016)

[.85]

R-squared .1321

Observations 212

standard errors in parentheses.

*** significant at 1 percent level 

** significant at 5 percent level

* significant at 10 percent level

p-values corresponding to residuals in period 400 to 201 trading days before first 

event are listed in brackets
27 Stater Brothers was privately held.

22

C. Vons Companies’ acquisition of Safeway’s Southern California stores (1987-1988)

Vons Companies’ 1988 acquisition of Safeway’s Southern California supermarkets

substantially increased concentration in several metropolitan areas in Southern California and

Nevada. Table 7 lists these metropolitan areas along with the relevant concentration statistics. 

The major competitors of Vons and Safeway when this merger was announced were Lucky

Stores Inc. (Lucky), Albertson’s Inc., American Stores Company’s Alpha Beta division

(American), Federated Department Stores’ Ralph’s division (Federated), and Stater Brothers. Of

these competitors, Lucky, Albertson’s, American, and Federated are good candidates for study.27

In 1988, roughly 30 percent of Lucky’s 579 stores, roughly 23 percent of Albertson’s 452 stores,

and roughly 11 percent of American’s 1498 stores were in metropolitan areas affected by the

acquisition. Federated obtained about 20 percent of its revenue from its Ralph’s supermarket

division. Nearly all of the Ralph’s stores were in metropolitan areas affected by the acquisition.

Table 7 shows the HHI statistics for the metropolitan areas where rival firms’ stores are located. 

For these stores, Vons’ acquisition of Safeway’s Southern California stores, on average,

increased the HHI by about 300 to about 1900. Thus, if Vons’ acquisition of Safeway’s Southern

California stores was anticompetitive, then the share price of Lucky, Albertson’s, and Federated

should increase while the share price of American should increase by a smaller amount. 

Table 8 lists all of the Wall Street Journal and New York Times articles relating to Vons’

acquisition of Safeway. Because Safeway was privately held during the time of this acquisition,

we cannot verify that news of the acquisition reached the market on these dates. In addition,

American bid to acquire Lucky on March 3, 1988. As Table 11 indicates, this set off a series of
28 Source: Supermarket News 1988 Distribution Study of Grocery Store Sales

23

Table 728

HHI statistics for Vons’ acquisition of Safeway’s Southern California stores

pre-merger

HHI

change in HHI post-merger

HHI

Lucky

stores

AlphaBeta

Stores

Albertson’s

stores

Ralph’s

stores

Los Angeles 1359 303 1662 131 168 55 113

San Diego 1897 706 2603 26 23 2 13

Riverside 2774 452 3266 7 9 3 1

San Bernardino 2692 271 2963 8 19 1 3

Bakersfield 1634 886 2520 0 2 3 1

Santa Barbara 2082 1091 3173 13 1 1 0

Ventura 2356 1778 4134 1 3 1 1

Las Vegas 1834 363 2197 12 4 11 0

Anaheim/Santa

Ana

1521 106 1627 36 41 25 32

Table 8

Wall Street Journal articles: Vons Companies acquisition of Safeway’s Southern California Stores

12/04/87 NY Times Safeway Stores Inc. to sell 172 stores to Vons Companies in deal valued at about $408.2 million

12/04/87 WSJ Vons Companies may acquire all Southern California operations of Safeway Supermarkets

5/31/88 WSJ FTC preliminarily approved plans for Vons to acquire all of Safeway Supermarkets Southern

California operations, but FTC required Vons to sell 12 stores.

7/28/88 NY Times California Attorney General challenges Vons’ acquisition of Safeway stores

8/30/88 WSJ Vons buys 172 stores from Safeway Stores
29 These results, however, do not rule out the possibility that this acquisition could have

reduced competition in small isolated markets.

24

events affecting the likely future market structure of supermarket retailing in Southern California. 

Since any event that makes Vons’ acquisition of Safeway more likely may also make American’s

acquisition of Lucky more likely, we cannot determine exactly what new information causes a market

response. For this reason, we focus our attention on two event dates. The first event date is December

4, 1987, the date when the Wall Street Journal first reported Von’s acquisition of Safeway’s Southern

California stores. A second event date, December 3, 1987, accounts for the possibility that information

about the acquisition reached the market one day prior to publication of the Wall Street Journal article.

Table 9 lists the abnormal returns for Albertson’s, Lucky, American, and Federated on

December 3, 1987 and December 4, 1987. On each of these days, some firms realized positive

abnormal returns and some firms realized negative abnormal returns. None of these returns were

statistically significant at standard levels. Taken together, these results do not suggest that Vons’

acquisition of Safeway broadly reduced competition throughout Southern California.29
30 A Wall Street Journal article reported Lucky’s quarterly dividend on this date.

31 On this date, a Wall Street Journal article reported that sales for the first 43 weeks of

1987 rose 4.7 percent.

25

Table 9

Estimated Event Response: Lucky Stores, Albertsons, American Stores, Federated (Ralphs)

Lucky Stores Albertsons American

Stores

Ralphs

intercept 0.0015

(0.0012)

0.0016

(0.0012)

0.00012

(0.0011)

-0.0002

(0.0014)

market return 0.74***

(0.12)

 0.93***

(0.11)

 1.25***

(0.11)

 1.04***

(0.14)

grocery index 0.36

(0.15)

0.025

(0.14)

 0.067**

(0.14)

0.095

(0.17)

12/3/87 0.018

(0.018)

[0.14]

-0.023

(0.017)

[0.92]

-0.0011

(0.017)

[0.55]

-0.023

(0.021)

[0.96]

12/4/87 0.01830

(0.018)

[.14]

0.023

(0.017)

[.08]

-.0046

(0.016)

[.63]

-0.01331

(0.021)

[0.84]

R-squared .5421 .5499 .7041 0.5316

Observations 212 212 212 212

standard errors in parentheses

*** significant at 1 percent level 

** significant at 5 percent level

* significant at 10 percent level

p-values corresponding to residuals in period 400 to 201 trading days before first event

are listed in brackets
26

D. American Stores acquisition of Lucky Stores Inc. (1988)

In March 1988, American Stores Company (American) made a tender offer for Lucky Stores

Inc (Lucky). A combination of these two chains would have increased concentration in metropolitan

areas in both the Midwest and California. We focus our attention on California because we could not

find a publicly traded firm in the Midwest that received a substantial share of its revenue from areas

affected by the merger.

In California, Albertson’s is the only rival that we study: Other rival supermarket chains were

either privately owned, accounted for only a small portion of their corporate parent’s total profits, or, as

was the case with Federated Department Stores’ Ralph’s Division, were the target of an acquisition

themselves. Table 10 shows the proposed combination’s effect on market share in those metropolitan

areas in which Albertson’s operated stores. Albertson’s operated roughly 26 percent of its 452 stores

in the metropolitan areas affected by the acquisition. For these stores, the proposed combination would

have led to an average increase in HHI of 361 and would have led to an average post-merger HHI of

2324. 

Table 11 lists all of the Wall Street Journal articles relating to American’s purchase of Lucky. 

Using Table 11 and the abnormal returns to Lucky, we identify four event dates when new information

about market structure in California might have affected Albertson’s stock. On March 22, Lucky

realized a positive abnormal return of 44.8 percent. This appears to be the date when news of

American’s bid for Lucky reached the market. Lucky also realized a positive abnormal return of 3.9

percent on March 23, the day the Wall Street Journal reported the bid, a positive abnormal return of 9.9

percent on April 28, the day Lucky announced that American’s bid was lower than another bid, which

turned out to be a leverage buyout (LBO), and a positive abnormal return of 2.3 percent on May 18, the 
32 Source: Supermarket News 1988 Distribution Study of Grocery Store Sales

27

Table 1032

HHI statistics for American’s acquisition of Lucky

pre-merger

HHI

change in

HHI

post-merger

HHI

Albertson’s

stores

Los Angeles 1662 242 1904 55

San Diego 2603 559 3162 2

Riverside 3266 126 3392 3

San Bernardino 2963 387 3350 1

Santa Barbara 3173 1721 3345 1

Ventura 4134 2688 4402 1

Las Vegas 2197 413 2610 11

Anaheim/Santa Ana 1627 632 2259 25

San Francisco 2522 302 2824 12

San Jose 1788 857 2645 1

Monterey 3196 277 3473 2

Oxnard 1730 916 2646 1

Santa Cruz 3327 220 3547 3

Table 11

Wall Street Journal articles: American Stores Company’s acquisition of Lucky Stores

3/23/88 WSJ American Stores Co. makes an unsolicited tender offer of $1.74 billion, or $45 a share, for Lucky

3/24/88 WSJ Lucky Stores Inc. shares climbed $2 as arbitragers bet a higher bid will emerge

3/29/88 WSJ American Stores may boost bid for Lucky Stores to $50 a share if Lucky agrees to a quick and

friendly transaction

4/8/88 WSJ Lucky Stores rejects $1.93 billion takeover offer

4/13/88 WSJ American Stores ready to negotiate tender offer

4/21/88 WSJ Lucky Stores is continuing to review variety of alternatives to American Stores $45 a share

tender offer and also delayed implementing further step in ‘poison pill’ defense
28

4/26/88 WSJ American Stores seeks Lucky Stores for $ 1.74 billion; latter closes bidding

4/27/88 WSJ American Stores seeks Lucky stores; pressures Lucky to set up formal auction

4/28/88 WSJ Lucky says American Stores bid is lower than others

4/29/88 WSJ Lucky Stores agreed to estimated $61 a share or 2.35 billion LBO, but American Stores may

press rival bid

5/2/88 WSJ American Stores extends bid for Lucky, which has agreed to an LBO

5/10/88 WSJ Lucky makes ultimatum that American Stores either boost bid or end takeover attempt

5/16/88 WSJ American Stores extends $1.74 billion takeover bid

5/18/88 WSJ American Stores bids $2.51 billion, or $65 a share, for Lucky stores

5/23/88 WSJ American Stores will buy Lucky for $ 2.51 billion

6/1/88 WSJ FTC gave preliminary approval to American Stores acquisition of Lucky stores provided

American Stores divests a limited number of stores.

7/28/88 NY Times California Attorney General challenges Von’s acquisition of Safeway stores

8/4/88 WSJ California Attorney General asked FTC to reject American Stores purchase of Lucky stores,

citing possible anti-competitive effects

8/15/88 WSJ American Stores to sell Kash ‘n Karry for $305 million; sells 38 Lucky Stores to ABCO markets

8/30/88 WSJ Vons buys 172 stores from Safeway Stores

9/2/88 WSJ American Stores gets final FTC approval for purchase of Lucky Stores

9/8/88 WSJ American Stores acquisition of Lucky Stores is temporarily blocked by federal judge

9/30/88 WSJ A federal judge issued a preliminary injunction blocking American Stores’ acquisition of Lucky

10/27/88 WSJ American Stores receives FTC approval to sell 37 stores as part of Lucky acquisition

4/3/89 WSJ A federal appeals court overturned a preliminary injunction that barred American Stores from

acquiring Lucky

7/7/89 WSJ American Stores Inc. said that a federal appeals court dismissed an action by the California

attorney general that sought to undo American’s merger with Lucky Stores Inc.

7/13/89 WSJ The 9th U.S. Circuit Court of Appeals granted a request by the California attorney general for a

30 day stay affecting American Stores’s acquisition of Lucky Stores Inc.

8/22/89 WSJ Supreme Court Justice Sandra Day O’Connor issued a last-minute order temporarily blocking the

merger of American Stores Co’s Lucky and Alpha Beta supermarket chains

11/8/89 WSJ The California Attorney general agreed to modify a preliminary federal court injunction that

blocked American Stores Co.’s merger of Alpha Beta and Lucky

5/1/89 WSJ The Supreme Court ruled that federal courts have broad powers to dismantle anticompetitive

mergers. This means that California officials may proceed in their effort to block American

Stores Co.’s takeover of Lucky

5/18/89 WSJ American Stores Co. plans to sell its Alpha Beta chain in order to settle an antitrust action

brought by the California attorney general.
29

day that American matched Lucky’s LBO bid. Based on this, we use March 22, March 23, April 28,

and May 18 as dates when new information about future market structure might have affected

Albertson’s stock. We cannot use Lucky’s abnormal returns to identify important dates after June 9,

1988 because Lucky ceased to be traded after this date. Consequently, we do not use these dates as

event dates.

Table 12 lists the abnormal returns for Albertson’s. On March 22, the day that Lucky realized a

positive abnormal return of 44.8 percent, Albertson’s realized a positive abnormal return of 2.9

percent. While this abnormal return is statistically significant at only the 14 percent level using the ttest, the abnormal return falls in the 95th percentile of the empirical distribution of Albertson’s

abnormal returns. Hence, if the empirical distribution of Albertson’s abnormal returns exactly

corresponded to the underlying sampling distribution, we could reject the null hypothesis that

Albertsons did not experience a positive return on March 22 at the 0.05 level using a one-sided test. 

Albertson’s realized a negative abnormal return that was not statistically significant at any standard

level on March 23 and realized a positive abnormal return that was not statistically significant at any

standard level on April 28. On May 18, the day that American matched Lucky’s competing bid,

Albertson’s realized a positive abnormal return of 2.2 percent that is not statistically significant at any

standard level, although this return corresponds to the 90th percentile of the empirical distribution of

Albertson’s abnormal returns. We believe that the results for the March 22 and May 18 event dates

represent limited evidence that the stock market believed that American’s acquisition of Lucky would

have led to higher supermarket prices in California. 

An event subsequent to American’s acquisition of Lucky offers some additional evidence that

the stock market believed that this acquisition would lead to higher supermarket prices. Both the 

Table 12
30

Estimated event Response: Albertsons

Albertsons

Intercept 0.0012

(0.0012)

market return 0.90***

(0.11)

supermarket index 0.083

(0.13)

3/22/88 0.028

(0.018)

[.05]

3/23/88 -0.012

(0.018)

[.20]

4/28/88 0.006

(0.018)

[.30]

5/18/88 0.022

(0.018)

[.07]

R-squared .5026

Observations 251

standard errors in parentheses

*** significant at 1 percent level 

** significant at 5 percent level

* significant at 10 percent level

p-values corresponding to residuals in period 400 to 201 trading days before first event

are listed in brackets
33 This return corresponds to the 98th percentile of the empirical distribution of

Albertson’s excess returns.

34 This estimate is based on figures in recent 10K reports for Albertson’s, Winn Dixie,

Weis Markets, and Safeway Stores.

31

Federal Trade Commission (FTC) and the California Attorney General’s office reviewed both Von’s

acquisition of Safeway and American’s acquisition of Lucky. While the FTC entered into a consent

with Vons that required Vons to divest 12 stores and entered into a consent with American that

required American to divest between 31 and 37 stores, the California Attorney General took a tougher

stance. The California Attorney General’s consent agreement with Vons required Vons to sell some

additional stores. In addition, the California Attorney General challenged American’s purchase of

Lucky in Federal Court and ultimately forced American to divest its Alpha Beta chain. The first article

in either the Wall Street Journal or the New York Times that indicated the California Attorney

General’s tougher stance was a July 28, 1988 New York Times article. On the day that this article

appeared, Albertson’s realized a negative abnormal return of 3.2 percent, which was statistically

significant at the 8 percent level using a t-test.33

The event study indicates that Albertsons’ realized abnormal returns of nearly 3 percent when

news of American’s tender offer for Lucky reached the market. By making several assumptions, we

can relate this increase in share price to an increase in product market prices. If we assume that

supermarkets have profit margins equal to roughly 2 percent of gross revenues,34 then a change in

market structure that increased price by 1 percent would increase supermarket profits by 50 percent. 

Assuming that the average revenue generated by Albertsons’ California stores equals the average

revenue generated by its other stores, a 50 percent increase in profit at the 26 percent of its stores that

operate in areas affected by the acquisition would lead to a 13 percent increase in overall profits. 
35 Supermarket News 1990 Distribution Study of Grocery Store Sales.

32

Assuming that the price increase lasted 2 years and assuming a discount rate of 15 percent, the 2 year

increase in profit should lead to a 3.5 percent increase in share price. Thus, the nearly 3 percent

increase in Albertson’s share price is roughly consistent with a 1 percent increase in supermarket prices

lasting 2 years based on our assumptions and the additional assumption that the stock market believed

that the tender offer would succeed with certainty. In 1988, the metropolitan areas of Los Angeles,

Anaheim/Santa Ana, San Diego, Riverside/San Bernardino, San Francisco, and San Jose had combined

supermarket sales of 23 billion dollars.35 Thus, a one percent price increase in these metropolitan areas

that lasted two years would amount to half a billion dollars. 

VI Conclusion

This study examines the abnormal stock returns of rival firms in order to determine whether

certain retailing mergers lead to higher product prices. Using a methodology that explicitly controls for

any nationwide efficiency-signaling effect, we find some evidence that two acquisitions may have led

to higher prices. Nordstrom, Carter Hawley Hale, and Federated experienced statistically significant

positive abnormal returns when May Department Stores announced its acquisition of Associated Dry

Goods. This acquisition increased the HHI computed for traditional department stores in Southern

California by 678 points to 2615. Using this methodology, we also find that Albertson’s experienced

abnormal returns that are consistent with American Stores’ acquisition of Lucky Stores leading to a

reduction in competition. This acquisition would have increased the HHI among supermarkets in the

affected metropolitan areas by 361 points to 2324. As described earlier, the abnormal stock returns of

the rival firms in these two mergers are roughly consistent with a one percent price increase lasting two
36 Because the geographic markets over which we compute the HHI statistics listed

above are broader than the geographic markets that likely would be defined using the Department

of Justice and Federal Trade Commission 1992 Merger Guidelines, we cannot say at what exact

HHI level the anticompetitive harm occurs. For instance, the anticompetitive harm found in the

American Stores/Lucky transaction may result entirely from antitrust markets where the postmerger HHI exceeds 3000.

33

or three years. These results offer some limited evidence that retailing mergers that lead to large

increases in concentration in already concentrated markets may lessen competition and lead to higher

product prices.36

We find no evidence that A&P’s 1986 acquisition of Waldbaum’s, which increased HHI by 262

points to 1337, or Von’s 1988 acquisition of Safeway’s Southern California stores, which increased the

HHI by 335 points to 1929, broadly reduced competition in the affected metropolitan areas. The

results for these two acquisitions suggest that mergers in relatively unconcentrated markets do not harm

competition.
34

References

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Commission

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Brown, S., and J. Warner, 1985, "Using daily stock returns: The case of event studies," Journal of

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Chevalier, J., 1995, "Capital structure and product-market competition: Empirical evidence from the

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Cotterill, R., 1986, “Market power in the retail food industry: Evidence from Vermont,” The 

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Eckbo, E., 1983, "Horizontal mergers, collusion, and stockholder wealth, Journal of Financial 

Economics, 11, 241-273.

Fama, E., 1976, Foundations of Finance, Basic Books, Inc., New York.

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decades," Financial Management, 18(3), 12-19.

McAfee, P., and M. Williams, 1988, "Can event studies detect anticompetitive mergers?," 

Economic Letters, 28, 199-203.

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Prager, R., 1992, "The effects of horizontal mergers on competition : the case of the Northern 

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37 We constructed this index by selecting those firms in SIC code 5311 (department

stores) for which CRSP had data during the relevant time period. We then deleted those firms

that Fairchild’s Financial Manual of Retail Stores (1986) did not list as operators of department

stores.

38 We constructed this index by selecting those firms in SIC code 5141 (groceries -

general line) for which CRSP had data during the relevant time period. We then deleted those

firms (e.g., Southland Corporation) that Fairchild’s Financial Manual of Retail Stores (1987) did

not list as operators of supermarkets.

35

Appendix A

Index for May Company’s acquisition of Associated Dry Goods37

Alexanders Inc.

Carson Pirie Scott & Co.

Crowley Milner & Co.

Macy R H & Co Inc.

Neiman Marcus Group Inc.

Wieboldt Stores Inc.

Index for Great Atlantic & Pacific Index for Von’s acquisition of Safeway and 

Tea Company’s acquisition of Waldbaum’s38 American Stores acquisition of Lucky

Albertsons Inc. Big V Supermarkets

Big V Supermarkets Inc. Bormans Inc.

Bormans Inc. Fisher Foods Inc.

Fisher Foods Inc. Foodarama Supermarkets Inc.

Foodarama Supermarkets Inc Giant Food Inc.

Giant Food Inc Great Atlantic & Pacific Tea Co

Kroger Company Kroger Company

Lucky Stores Inc. Motts Holdings Inc.

Motts Holdings Inc. Penn Traffic Co.

Penn Traffic Co. Penn Traffic Co. New

Pueblo International Inc. Pueblo International Inc.

Safeway Stores Inc. Smiths Food & Drug Centers Inc.

Stop&Shop Cos. Inc. Stop & Shop Cos

Sunshine Jr. Stores Inc. Sunshine Jr. Stores Inc

Vons Companies Inc. Supermarkets General Corp.

Weis Markets Inc. Weis Markets Inc.

Winn Dixie Stores Inc. Winn Dixie Stores Inc.