James A. Fishkin
Washington, D.C. +1 202 261 3421
After an investigation setting a longevity record for supermarket deals, on July 22, 2016, the Federal Trade Commission accepted for public comment a consent order requiring Koninklijke Ahold NV, which operates Stop & Shop, Giant and Martin's supermarkets, to divest 81 stores in 46 local markets to seven "upfront buyers" in order to obtain clearance to acquire Delhaize Group, which operates Food Lion and Hannaford supermarkets. The post-merger Herfindahl-Hirschman Index in the 46 local markets ranged from as low as 2,268 points, which is "moderately concentrated" under the 2010 horizontal merger guidelines, to 10,000 points — a merger to monopoly.
In both Ahold/Delhaize and the FTC's 2015 Albertsons/Safeway consent order, approximately 60 percent of the divestiture markets in each transaction had from three to six remaining supermarket competitors (i.e., 4-to-3, 5-to-4, 6-to-5, and 7-to-6 markets). As shown in the chart below of supermarket merger investigations during the Obama administration, prior to Albertsons/Safeway the FTC had not brought an enforcement action in any local areas with three or more remaining supermarkets.
Read "FTC Continues Focus On 'Traditional Supermarket' Competition."