Federal Register / Vol. 66, No. 245 / Thursday, December 20, 2001 / Notices 65711

FEDERAL TRADE COMMISSION

[File No. 011 0247]

Koninklijke Ahold N.V. and Bruno’s

Supermarkets, Inc.; Analysis To Aid

Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

SUMMARY: The consent agreement in this

matter settles alleged violations of

federal law prohibiting unfair or

deceptive acts or practices or unfair

methods of competition. The attached

Analysis to Aid Public Comment

describes both the allegations in the

draft complaint that accompanies the

consent agreement and the terms of the

consent order—embodied in the consent

agreement—that would settle these

allegations.

DATES: Comments must be received on

or before January 7, 2002.

ADDRESSES: Comments filed in paper

form should be directed to: FTC/Office

of the Secretary, Room 159–H, 600

Pennsylvania Avenue, NW, Washington,

DC 20580. Comments filed in electronic

form should be directed to:

consentagreement@ftc.gov, as

prescribed below.

FOR FURTHER INFORMATION CONTACT:

Susan Huber, Bureau of Competition,

600 Pennsylvania Avenue, NW,

Washington, DC 20580, (202) 326–3331.

SUPPLEMENTARY INFORMATION: Pursuant

to section 6(f) of the Federal Trade

Commission Act, 38 Stat. 721, 15 U.S.C.

46(f), and § 2.34 of the Commission’s

rules of practice, 16 CFR § 12.34, notice

is hereby given that the above-captioned

consent agreement containing a consent

order to cease and desist, having been

filed with and accepted, subject to final

approval, by the Commission, has been

placed on the public record for a period

of thirty (30) days. The following

Analysis to Aid Public Comment

describes the terms of the consent

agreement, and the allegations in the

complaint. An electronic copy of the

full text of the consent agreement

package can be obtained from the FTC

Home Page (for December 7, 2001), on

the World Wide Web, at ‘‘http://

www.ftc.gov/os/2001/12/index.htm.’’ A

paper copy can be obtained from the

FTC Public Reference Room, Room 130-

H, 600 Pennsylvania Avenue, NW,

Washington, DC 20580, either in person

or by calling (202) 326–2222.

Public comments are invited, and may

be filed with the Commission in either

paper or electronic form. Comments

filed in paper form should be directed

to: FTC/Office of the Secretary, Room

159–H, 600 Pennsylvania Avenue, NW,

Washington, DC 20580. If a comment

contains nonpublic information, it must

be filed in paper form, and the first page

of the document must be clearly labeled

‘‘confidential.’’ Comments that do not

contain any nonpublic information may

instead be filed in electronic form (in

ASCII format, WordPerfect, or Microsoft

Word) as part of or as an attachment to

email messages directed to the following

email box: consentagreement@ftc.gov.

Such comments will be considered by

the Commission and will be available

for inspection and copying at its

principal office in accordance with

§ 4.9(b)(6)(ii) of the Commission’s rules

of practice, 16 CFR 4.9(b)(6)(ii)).

Analysis of the Draft Complaint and

Proposed Decision Order To Aid Public

Comment

I. Introduction

The Federal Trade Commission

(‘‘Commission) has accepted for public

comment from Koninklijke Ahold NV,

(‘‘Ahold’’), and Bruno’s Supermarkets

Inc., (‘‘Bruno’s’’) (collectively ‘‘the

Proposed Respondents’’) an Agreement

Containing Consent Orders (‘‘the

proposed consent order’’). The Proposed

Respondents have also reviewed a draft

complaint contemplated by the

Commission. The proposed consent

order is designed to remedy likely

anticompetitive effects arising from

Ahold’s proposed acquisition of all of

the outstanding voting stock of Bruno’s.

II. Description of the Parties and the

Proposed Acquisition

Ahold is a global food service and

food retailer headquartered in the

Netherlands. The company operates or

services approximately 8,500 stores in

the United States, Europe, Latin

America and Asia and had sales of over

$49 billion in 2000. In the United States,

Ahold, through its U.S. subsidiary

Ahold U.S.A., Inc., operates over 1,300

retail food stores, including

supermarkets under the Giant, Stop &

Shop, Tops and BI–LO trade names. In

the southeastern United States, Ahold

owns and operates 294 BI–LO

supermarkets as well as a number of

Golden Gallon convenience stores.

Bruno’s, headquartered in

Birmingham, is the largest supermarket

chain in the state of Alabama. With

annual sales in 2000 of over $1.5 billion,

Bruno’s operates 169 supermarkets in

Alabama (123), Georgia (25), Florida

(16) and Mississippi (2) as well as 13

liquor stores and two gas stations.

Bruno’s operates supermarkets under

the trade names Bruno’s Fine Foods,

Food World, FoodMax, Food Fair and

Fresh Value.

On September 4, 2001, Ahold and

Bruno’s signed an agreement whereby

Ahold will purchase all of the

outstanding voting securities of Bruno’s

through the merger of New Bronco

Acquisition Corp., an indirect wholly

owned subsidiary of Ahold, with and

into Bruno’s Supermarkets. Bruno’s

Supermarkets will continue as the

surviving corporation. The value of the

transaction is approximately $500

million.

III. The Draft Complaint

The draft complaint alleges that the

relevant line of commerce (i.e., the

product market) is the retail sale of food

and grocery items in supermarkets.

Supermarkets provide a distinct set of

products and services for consumers

who desire one-stop shopping for food

and grocery products. Supermarkets

carry a full line and wide selection of

both food and nonfood products

(typically more than 10,000 different

stock-keeping units (‘‘SKUs’’)), as well

as an extensive inventory of those SKUs

in a variety of brand names and sizes.

In order to accommodate the large

number of nonfood products necessary

for one-stop shopping, supermarkets are

large stores that typically have at least

10,000 square feet of selling space.

Supermarkets compete primarily with

other supermarkets that provide onestop shopping for food and grocery

products. Supermarkets base their food

and grocery prices primarily on the

prices of food and grocery products sold

at nearby 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.

Retail stores other than supermarkets

that sell food and grocery products,

such as neighborhood ‘‘mom & pop’’

grocery stores, limited assortment

stores, convenience stores, specialty

food stores (e.g., seafood markets,

bakeries, etc.), club stores, military

commissaries, and mass merchants, do

not effectively constrain prices at

supermarkets. The retail format and

variety of items sold at these other

stores are significantly different from

that of supermarkets. None of these

other retailers offer a sufficient quantity

and variety of products to enable

consumers to one-stop shop for food

and grocery products.

The draft complaint alleges that the

relevant sections of the country (i.e., the

geographic markets) in which to analyze

the acquisition are the areas in or near

the towns of Milledgeville and

Sandersville, Georgia. Ahold and

Bruno’s are direct competitors in both of

65712 Federal Register / Vol. 66, No. 245 / Thursday, December 20, 2001 / Notices

the relevant markets. The draft

complaint alleges that the post-merger

markets would each be highly

concentrated, whether measured by the

Herfindahl-Hirschman Index

(commonly referred to as ‘‘HHI’’) or

four-firm concentration ratios. The

acquisition would substantially increase

concentration in each market. The postacquisition HHI in each of the

geographic markets would be above

5400.

The draft complaint further alleges

that entry would not be timely, likely,

or sufficient to prevent anticompetitive

effects in the relevant geographic

markets.

The draft complaint also alleges that

Ahold’s acquisition of all of the

outstanding voting securities of Bruno’s,

if consummated, may substantially

lessen competition in the relevant line

of commerce in the relevant markets in

violation of Section 7 of the Clayton

Act, as amended, 15 U.S.C. 18, and

section 5 of the Federal Trade

Commission Act, as amended, 15 U.S.C.

45, by eliminating direct competition

between supermarkets owned or

controlled by Ahold and supermarkets

owned and controlled by Bruno’s; by

increasing the likelihood that Ahold

will unilaterally exercise market power;

and by increasing the likelihood of, or

facilitating, collusion or coordinated

interaction among the remaining

supermarket firms. Each of these effects

increases the likelihood that the prices

of food, groceries or services will

increase, and that the quality and

selection of food, groceries or services

will decrease, in the geographic markets

alleged in the complaint.

IV. The Terms of the Agreement

Containing Consent Orders

The Agreement Containing Consent

Orders (‘‘proposed consent order’’) will

remedy the Commission’s competitive

concerns about the proposed

acquisition. Under the terms of the

proposed consent order, Ahold must

divest two BI–LO supermarkets, one in

Milledgeville and one in Sandersville,

Georgia. In each community, Ahold

owns only one supermarket. Both of the

divestitures are to experienced up-front

buyers who would be new entrants in

the relevant geographic markets and

who the Commission has pre-evaluated

for competitive and financial viability.

The Commission’s evaluation process

consisted of analyzing the financial

condition of the proposed acquirers and

the locations of their current

supermarkets to ensure that divestitures

to them would not increase

concentration or decrease competition

in the relevant markets and to determine

that these purchasers are well qualified

to operate the divested stores.

In Milledgeville, Ahold will sell its

BI-LO to The Kroger Co. (‘‘Kroger’’),

which is headquartered in Cincinnati,

Ohio. Kroger operates supermarkets in

southeastern Georgia and throughout

the United States. Ahold will sell its BI–

LO in Sandersville to Winn-Dixie

Stores, Inc. (‘‘Winn-Dixie’’),

headquartered in Jacksonville, Florida.

Winn-Dixie also operates supermarkets

in southeastern Georgia and throughout

the U.S.

Paragraph II.A. of the proposed

consent order requires that the

divestitures must occur no later than 10

business days after the merger is

consummated. However, if Ahold

consummates the divestitures to Kroger

and Winn-Dixie during the public

comment period, and if, at the time the

Commission decides to make the order

final, the Commission notifies Ahold

that Kroger or Winn-Dixie is not an

acceptable acquirer or that the asset

purchase agreement with Kroger or

Winn-Dixie is not an acceptable manner

of divestiture, then Ahold must

immediately rescind the transaction in

question and divest those assets to

another buyer within three months of

the date the order becomes final. At that

time, Ahold must divest those assets

only to an acquirer that receives the

prior approval of the Commission and

only in a manner that receives the prior

approval of the Commission. In the

event that any Commission-approved

buyer is unable to take or keep

possession of any of the supermarkets

identified for divestiture the

Commission may appoint a trustee with

the power to divest any assets that have

not been divested to satisfy the

requirements of the proposed consent

order.

The proposed consent order also

enables the Commission to appoint a

trustee to divest any supermarkets or

sites identified in the order that Ahold

has not divested to satisfy the

requirements of the proposed consent

order. In addition, the proposed order

enables the Commission to seek civil

penalties against Ahold for noncompliance with the proposed consent

order.

The proposed consent also requires

Proposed Respondents to maintain the

viability, marketability and

competitiveness of the supermarkets

identified for divestitures. Among other

requirements related to maintaining

operations at these supermarkets, the

proposed consent order also specifically

requires the Proposed Respondents to:

(1) Maintain the viability,

competitiveness and marketability of

the assets to be divested; (2) not cause

the wasting or deterioration of the assets

to be divested; (3) not sell, transfer,

encumber, or otherwise impair their

marketability or viability; (4) maintain

the supermarkets consistent with past

practices; (5) use best efforts to preserve

existing relationships with suppliers,

customers, and employees; and (6) keep

the supermarkets open for business and

maintain the inventory at levels

consistent with past practices.

The proposed consent order also

prohibits Ahold from acquiring, without

providing the Commission with prior

notice, any supermarkets, or any interest

in any supermarkets, located in the

counties that include Milledgeville and

Sandersville, Georgia for ten years.

These are the areas from which the

supermarkets to be divested draw

customers. The provisions regarding

prior notice are consistent with the

terms used in prior Orders. The

proposed consent order does not,

however, restrict the Proposed

Respondents from constructing new

supermarkets in the above areas; nor

does it restrict the Proposed

Respondents from leasing facilities not

operated as supermarkets within the

previous six months.

The proposed consent also prohibits

Ahold, for a period of ten years, 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

January 1, 2001, to operate a

supermarket at that site if that site was

formerly owned or operated by Ahold or

Bruno’s in any of the above areas. In

addition, the Proposed Respondents are

prohibited from removing fixtures or

equipment from a store or property

owned or leased by Ahold or Bruno’s in

Sandersville or Milledgeville, Georgia,

that is no longer operated as a

supermarket, except (1) prior to a sale,

sublease, assignment, or change in

occupancy or (2) to relocate such

fixtures or equipment in the ordinary

course of business to any other

supermarket owned or operated by the

Proposed Respondents.

The Proposed Respondents are

required to file compliance reports with

the Commission, the first of which is

due within thirty days of the date on

which Proposed Respondents signed the

proposed consent, and every thirty days

thereafter until the divestitures are

completed, and annually for ten years.

V. Opportunity for Public Comment

The proposed consent order has been

placed on the public record for 30 days

for receipt of comments by interested

Federal Register / Vol. 66, No. 245 / Thursday, December 20, 2001 / Notices 65713

persons. Comments received during this

period will become part of the public

record. After 30 days, the Commission

will again review the proposed consent

order and the comments received and

will decide whether it should withdraw

from the agreement or make the

proposed consent order final.

By accepting the proposed consent

order subject to final approval, the

Commission anticipates that the

competitive problems alleged in the

complaint will be resolved. The purpose

of this analysis is to invite public

comment on the proposed consent

order, including the proposed sale of

supermarkets to Kroger and Winn-Dixie,

in order to aid the Commission in its

determination of whether to make the

proposed consent order final. This

analysis is not intended to constitute an

official interpretation of the proposed

consent order nor is it intended to

modify the terms of the proposed

consent order in any way.

By direction of the Commission.

Donald S. Clark,

Secretary.

[FR Doc. 01–31338 Filed 12–19–01; 8:45 am]

BILLING CODE 6750–01–P

FEDERAL TRADE COMMISSION

[File No. 011 0083]

Nestle Holdings, Inc. and Ralston

Purina Co.; Analysis To Aid Public

Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

SUMMARY: The consent agreement in this

matter settles alleged violations of

federal law prohibiting unfair or

deceptive acts or practices or unfair

methods of competition. The attached

Analysis to Aid Public Comment

describes both the allegations in the

draft complaint that accompanies the

consent agreement and the terms of the

consent order—embodied in the consent

agreement—that would settle these

allegations.

DATES: Comments must be received on

or before January 11, 2002.

ADDRESSES: Comments filed in paper

form should be directed to: FTC/Office

of the Secretary, Room 159-H, 600

Pennsylvania Avenue, NW.,

Washington, DC 20580. Comments filed

in electronic form should be directed to:

consentagreement@ftc.gov, as

prescribed below.

FOR FURTHER INFORMATION CONTACT:

Phillip L. Broyles, Bureau of

Competition, 600 Pennsylvania Avenue,

NW., Washington, DC 20580, (202) 326–

2805.

SUPPLEMENTARY INFORMATION: Pursuant

to section 6(f) of the Federal Trade

Commission Act, 38 Stat. 721, 15 U.S.C.

46(f), and § 2.34 of the Commission’s

rules of practice, 16 CFR 2.34, notice is

hereby given that the above-captioned

consent agreement containing a consent

order to cease and desist, having been

filed with and accepted, subject to final

approval, by the Commission, has been

placed on the public record for a period

of thirty (30) days. The following

Analysis to Aid Public Comment

describes the terms of the consent

agreement, and the allegations in the

complaint. An electronic copy of the

full text of the consent agreement

package can be obtained from the FTC

Home Page (for December 11, 2001), on

the World Wide Web, at http://

www.ftc.gov/os/2001/12/index.htm. A

paper copy can be obtained from the

FTC Public Reference Room, Room 130-

H, 600 Pennsylvania Avenue, NW.,

Washington, DC 20580, either in person

or by calling (202) 326–2222.

Public comments are invited, and may

be filed with the Commission in either

paper or electronic form. Comments

filed in paper form should be directed

to: FTC/Office of the Secretary, Room

159–H, 600 Pennsylvania Avenue, NW.,

Washington, DC 20580. If a comment

contains nonpublic information, it must

be filed in paper form, and the first page

of the document must be clearly labeled

‘‘confidential.’’ Comments that do not

contain any nonpublic information may

instead be filed in electronic form (in

ASCII format, WordPerfect, or Microsoft

Word) as part of or as an attachment to

email messages directed to the following

email box: consentagreement@ftc.gov.

Such comments will be considered by

the Commission and will be available

for inspection and copying at its

principal office in accordance with

§ 4.9(b)(6)(ii) of the Commission’s rules

of practice, 16 CFR 4.9(b)(6)(ii)).

Analysis of Proposed Consent Order To

Aid Public Comment

I. Introduction

The Federal Trade Commission

(‘‘Commission’’) has issued a complaint

(‘‘Complaint’’) alleging that the

proposed merger of Nestle Holdings,

Inc. (‘‘Nestle’’), and Ralston Purina

Company (‘‘Ralston’’) (collectively

‘‘Proposed Respondents’’) would violate

section 7 of the Clayton Act, as

amended, 15 U.S.C. 18, and section 5 of

the Federal Trade Commission Act, as

amended, 15 U.S.C. 45, and has entered

into an agreement containing consent

orders (‘‘Agreement Containing Consent

Orders’’) pursuant to which

Respondents agree to be bound by a

proposed consent order that requires

divestiture of certain assets (‘‘Proposed

Consent Order’’) and an order that

requires Proposed Respondents to

maintain certain assets pending

divestiture (‘‘Asset Maintenance

Order’’). The Proposed Order remedies

the likely anticompetitive effects arising

from Proposed Respondents’ proposed

merger, as alleged in the Complaint. The

Asset Maintenance Order preserves

competition pending divestiture.

II. Description of the Parties and the

Transaction

Nestle Holdings, Inc., is a corporation

organized, existing, and doing business

under and by virtue of the laws of the

State of Delaware. This subsidiary of

Nestle S.A. is the U.S. corporation that

will be purchasing all of the outstanding

Ralston shares. Nestle SA, the largest

food corporation in the world,

manufactures, distributes, and sells

dairy products, soluble coffee, roast and

ground coffee, mineral water, beverages,

breakfast cereals, coffee creamers, infant

foods and dietetic products, culinary

products (seasonings, canned foods,

pasta, sauces, etc.), frozen foods, ice

cream, refrigerated products (e.g.,

yogurt, desserts, pasta, sauces),

chocolate, food services,

ophthalmological products, cosmetics,

and pet foods. Nestle sells its pet food

products in the U.S. through its Friskies

division, including Alpo, Come ‘‘N Get

It, Mighty Dog, Friskies, Fancy Feast,

Jim Dandy, and Chef’s Blend. Nestle had

worldwide sales of approximately 81.4

billion Swiss francs and United States

sales of approximately $7.8 billion for

all products in 2000.

Ralston is a corporation organized,

existing, and doing business under and

by virtue of the laws of the State of

Missouri. Ralston is the world’s leading

producer of dry dog and dry and softmoist cat foods. The brands that Ralston

manufacturers, distributes, and sells

include Dog Chow, Puppy Chow, Cat

Chow, Kitten Chow, Purina Special

Care, Meow Mix, Purina O.N.E., Purina

Pro Plan, Fit & Trim, Clinical Nutrition

Management, Alley Cat, Deli-Cat,

Thrive, Tender Vittles, Happy Cat,

Chuck Wagon Stampede, and Main

Stay. Ralston had worldwide sales of

approximately $3 billion and United

States sales of approximately $2.36

billion for all products for fiscal year

2000.

Pursuant to a merger agreement dated

January 15, 2001, Nestle agreed to

purchase all of Ralston’s outstanding

shares of common stock in a transaction

valued at $ 10.3 billion. Nestle intends