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    FTC Urged to Examine Divestiture Policy

    WASHINGTON, DC - The industry gained an influential ally Thursday in its campaign to get the federal government to stop requiring that all stores divested in a market area when two chains merge go to a single buyer.

    WASHINGTON, DC - The industry gained an influential ally Thursday in its campaign to get the federal government to stop requiring that all stores divested in a market area when two chains merge go to a single buyer.

    Sen. Christopher S. "Kit" Bond, R-Mo., called on Federal Trade Commission chairman Timothy J. Muris to order an agency study of divestiture orders made final since 1994 to review the viability of the buyers and the effects on competition in the markets. In the mid-1990s the FTC moved to a so-called "clean sweep," or single buyer, guideline from a policy under which divested stores were divided among several buyers.

    Bond, the ranking member of the Senate Small Business Committee, made the request after the General Accounting Office released a report saying the FTC hasn't studied the effects of its divestiture policy. The nonpartisan GAO is the investigative arm of Congress.

    "Small firms may be losing prime opportunities to gain a foothold in thriving retail markets under the FTC's merger guidelines," Bond said, adding, "It seems that allowing small and independent firms to acquire part of the stores divested under these agreements would have a beneficial impact on competition as well as the consumer."

    The GAO report noted that both the Food Marketing Institute and the National Grocers Association have submitted comments to the FTC complaining that its divestiture practices "have hindered the ability of small businesses to purchase divested assets."

    For the time being, the issue may be moot. After a wave of major supermarket mergers beginning in the mid-1990s, activity has been all but halted by the faltering economy and low stock prices. However, many observers predict consolidation will resume when the economy recovers.

    --Tom Weir

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