Report: Royal Ahold Faces Antitrust Scrutiny for Big V Proposal
WASHINGTON - The joint bid by Royal Ahold NV and Pathmark Stores Inc. for bankrupt Big V Supermarkets Inc. is facing scrutiny from the Federal Trade Commission, TheDeal.com reports.
According to a report on the Web site, sources said the Federal Trade Commission is investigating whether the $225 million deal would harm competition outside the markets where the chains compete head-to-head.
Big V is the largest member of Wakefern Food Corp., a retailer-owned cooperative that services about 200 independent supermarkets operating under the ShopRite banner.
Sources said Wakefern has argued that Big V's departure would be significant enough to cost the company higher prices for goods, which in turn would be passed on to its members. Its members would therefore be less competitive against Ahold and Pathmark stores in New Jersey, New York, Pennsylvania and Connecticut.
It is too early for the FTC to conclude if the complaint has merit, according to the report. Neither company has filed a Hart-Scott-Rodino Antitrust Improvements Act notice, which is required to formally begin the FTC merger review.
This is not the first time either the FTC or Ahold has had to deal with a rivals'-costs argument in a supermarket deal, the report notes. When Ahold bought Giant Food Inc. in 1998, the FTC examined what the deal would mean for Richfood Holdings Inc., an independent wholesaler that supplied Giant with some products. The FTC did not find enough evidence of harm to support a case.
According to a report on the Web site, sources said the Federal Trade Commission is investigating whether the $225 million deal would harm competition outside the markets where the chains compete head-to-head.
Big V is the largest member of Wakefern Food Corp., a retailer-owned cooperative that services about 200 independent supermarkets operating under the ShopRite banner.
Sources said Wakefern has argued that Big V's departure would be significant enough to cost the company higher prices for goods, which in turn would be passed on to its members. Its members would therefore be less competitive against Ahold and Pathmark stores in New Jersey, New York, Pennsylvania and Connecticut.
It is too early for the FTC to conclude if the complaint has merit, according to the report. Neither company has filed a Hart-Scott-Rodino Antitrust Improvements Act notice, which is required to formally begin the FTC merger review.
This is not the first time either the FTC or Ahold has had to deal with a rivals'-costs argument in a supermarket deal, the report notes. When Ahold bought Giant Food Inc. in 1998, the FTC examined what the deal would mean for Richfood Holdings Inc., an independent wholesaler that supplied Giant with some products. The FTC did not find enough evidence of harm to support a case.