More than buyer must beware
Whether out of convenience, habit, a sense of loyalty or a combination of those, most of us do our grocery shopping at the same one or two stores and even have our favorite checkers there.
For many, that was thrown into turmoil this year with Haggen's failed acquisition of 146 Albertsons and Safeway stores and its subsequent bankruptcy proceedings, spelling the looming end of a respected regional company, the loss of jobs for many, the closure of some stores, a reshuffling of others and a failure of a federal agency's attempt to protect the consumers' interests.
When grocery giants Albertsons and Safeway proposed a $9.2 billion merger, the Federal Trade Commission, in order to preserve competitiveness and fair prices in more than 100 communities throughout the West, required the companies to sell 168 of their stores in Washington, Oregon, California, Arizona and New Mexico. Haggen, a Bellingham-based grocery chain, bought 146 of the stores for $300 million in January, growing from 18 stores in Washington into a regional player in the West about nine times its size.
But nearly from the start, Haggen struggled. It sued Albertsons, claiming anticompetitive practices had threatened its entry into its new markets. By the end of summer Haggen announced the sale of the stores it recently purchased, its bankruptcy and later its intention to sell its core of original stores, many of them still successful.
Having to backtrack its original intention, the FTC had to agree to allow Albertsons to buy back many of the stores it was ordered to sell, a result that a Wall Street Journal article called “a misfire by U.S. antitrust enforcers.”
A bankruptcy judge approved Albertsons' repurchase of about 30 stores in the five states for $14 million; at least a half-dozen of them went for $1 along with taking on each store's liabilities. Some smaller communities, the Wall Street Journal reported, are left with just a Safeway and an Albertsons, both owned by the same company now. So much for competitive prices in those communities.
The failure also affected many workers who had initially stayed on as Haggen took over their stores. A clause in the FTC's initial order forbade Safeway or Albertsons from hiring away their former employees from Haggen, even after Haggen stores closed. Following a request by U.S. Rep. Derek Kilmer, D-Washington, who represents the Sixth District communities in the Olympic and Kitsap peninsulas, the FTC waived that prohibition, allowing those workers to again take jobs at a Safeway or Albertsons.
Kilmer announced legislation Monday at a closed Haggen store in Gig Harbor that would prohibit such noncompete clauses from applying to workers in any future corporate merger.
This year's events should also provide some lessons and second thoughts for how such mergers and the requirements meant to protect consumers are handled. If it wants to serve the interests of consumers, the FTC ought to look more closely at prospective buyers when it requires such sales to ensure they can manage their new acquisitions and offer the competition the agency desires to promote.
Source: HeraldNet