With the divestiture of 168 stores, Albertsons and Safeway can merge the companies, according to the Federal Trade Commission. The companies expect to complete the $9.2 billion merger within the next five business days.
The grocers announced early last year that Albertsons planned purchase Safeway and just last month said they planned to divest the 168 stores to four buyers, with the bulk of those going to Haggen.
The FTC says the supermarket divestiture is the agency’s largest divestiture order to date and that, without it, the initial merger between Albertsons and Safeway “would likely be anticompetitive in 130 local markets in Arizona, California, Montana, Nevada, Oregon, Texas, Washington and Wyoming.
According to the FTC’s complaint, Albertsons and Safeway compete vigorously on the price, quality, product variety and services, and offer consumers the convenience of one-stop shopping for food and other grocery products. Without a remedy, like the divestiture, according to the FTC, the acquisition will lessen supermarket competition to the detriment of consumers in 130 local markets.
“Consumers everywhere rely on local supermarkets for their weekly shopping needs,” said FTC Chairwoman Edith Ramirez. “Absent a remedy, this acquisition would likely lead to higher prices and lower quality for supermarket shoppers in 130 communities. This settlement will ensure that consumers in those communities continue to benefit from competition among their local supermarkets.”
At the time the proposed acquisition was announced, Albertson’s LLC operated 630 supermarkets under the Albertsons banner in 15 states, and under the Market Street, Amigos and United Supermarkets banners in Texas. New Albertson’s Inc. operated 445 supermarkets under the Jewel-Osco, Acme, Shaw’s and Star Market banners in the eastern U.S. Safeway operated 1,332 supermarkets under the Safeway, Tom Thumb, Randall’s, Pak ’n Save, The Market, Vons, Pavilions and Genuardi’s banners located throughout the country.
In addition to Haggen acquiring 146 Albertsons and Safeway stores in Arizona, California, Nevada, Oregon and Washington, Supervalu Inc. will acquire two Albertsons stores in Washington, Associated Wholesale Grocers (AWG) will acquire 12 Albertsons and Safeway stores in Texas and Associated Food Stores will acquire eight Albertsons and Safeway stores in Montana and Wyoming. It is expected that AWG will assign its operating rights in the 12 Texas stores it is acquiring to RLS Supermarkets (doing business as Minyard Food Stores) and that Associated Food Stores will assign its rights in the eight Montana and Wyoming stores it is acquiring to Missoula Fresh Market, Ridley’s Family Markets and Stokes.
Under the proposed settlement, the divestitures to Haggen must be completed within 150 days of the date of the merger, the divestitures to Supervalu must be completed within 100 days and the divestitures to Associated Food Stores Inc. and Associated Wholesale Grocers must be completed within 60 days.
The FTC vote to issue the complaint and accept the proposed consent order for public comment was 5-0. The FTC will soon publish the consent agreement package in the Federal Register. The agreement will be subject to public comment through Feb. 26, after which the FTC will decide whether to make the proposed consent order final.