FTC Negotiates Settlements in Albertson's/Buttrey Merger to Keep Supermarket Prices Competitive in Montana and Wyoming

The Federal Trade Commission, in an effort to keep supermarket prices competitive in Montana and Wyoming, has negotiated an agreement with Albertson's, Inc. and Buttrey Food and Drug Store Company. The agreement would settle FTC charges that Albertson's acquisition of Buttrey would violate antitrust laws by substantially lessening supermarket competition in those two states, and could result in higher prices or reduced quality and selection for consumers. The agreement would require Albertson's and Buttrey to divest 15 supermarkets in 11 communities -- eight of the supermarkets are located in Montana and seven are in Wyoming. Under the consent agreement, 13 of the supermarkets would be sold to Smith's Food and Drug Centers, Inc. and two supermarkets would be sold to Supervalu Holdings, Inc.

The FTC worked closely in its investigation with Montana Attorney General Joe Mazurek, who believes that the merger would likely have harmed Montana consumers and that this consent decree would preserve competition.

"This settlement will ensure that consumers in Montana and Wyoming continue to enjoy the benefits of competition -- lower prices and good quality and selection -- from supermarkets in their communities," said William J. Baer, Director of the FTC's Bureau of Competition. "The Commission's goal when it mandates the selling of stores is to maintain the competitive environment that exists prior to the merger. To ensure speedy divestiture, the proposed settlement names the buyers and would require that the sales be completed in a timely fashion."

Albertson's, the nation's fourth largest supermarket chain, is based in Boise, Idaho. It operates approximately 916 supermarkets in 23 Western, Midwestern, and Southern states. Albertson's supermarkets operate under the "Albertson's" and "Max Food and Drug" trade names. Albertson's operates nine supermarkets in Montana (eight directly compete with Buttrey stores) and nine supermarkets in Wyoming (seven directly compete with Buttrey stores). Albertson's total sales for the fiscal year ending January 29, 1998, were approximately $14.7 billion.

Buttrey, headquartered in Great Falls, Montana, operates 44 supermarkets in Montana, Wyoming, and North Dakota. Buttrey operates supermarkets under the "Buttrey Big Fresh," "Buttrey Food & Drug," and "Buttrey Fresh Foods" trade names. Buttrey's total sales for the fiscal year ending January 31, 1998, were $391.4 million.

According to the FTC complaint outlining the charges, Albertson's and Buttrey are direct competitors in the following 11 communities: Billings, Montana; Bozeman, Montana; Butte, Montana; Great Falls, Montana; Helena, Montana; Missoula, Montana; Casper, Wyoming; Cheyenne, Wyoming; Cody, Wyoming; Gillette, Wyoming; and Laramie, Wyoming. Therefore, Albertson's proposed acquisition of Buttrey, may substantially lessen competition by eliminating this direct competition; by increasing the likelihood that Albertson's will unilaterally exercise market power; or by increasing the likelihood of collusion among the remaining supermarket firms, the complaint states. Each of these effects increases the likelihood that the prices of food, groceries or services will increase, and the quality and selection of food, groceries or services will decrease in these communities, the Commission said.

The complaint also states that entry into the supermarket market is difficult and would not be timely, likely, or sufficient to prevent anticompetitive effects in the relevant geographic markets.

The proposed consent agreement would require the following 13 supermarkets to be divested to Smith's:

• Buttrey Big Fresh, located at 1601 Marketplace Drive, Great Falls, Mont.;
• Buttrey Big Fresh, located at 2825 West Main Street, Bozeman, Mont.;
• Buttrey Fresh Foods, located at 1000 Boulder Avenue, Helena, Mont.;
• Albertson's, located at 1906 Brooks Street, Missoula, Mont.;
• Buttrey Fresh Foods, located at 3745 Harrison Avenue, Butte, Mont.;
• Buttrey Fresh Foods, located at 600 South Excelsior Street, Butte, Mont.;
• Albertson's, located at 1633 Grand Avenue, Billings, Mont.;
• Albertson's, located at 1531 Main Street, Billings, Mont.;
• Albertson's, located at 1209 15th Street, Laramie, Wyo.;
• Buttrey Fresh Foods, located 906 Camel Drive, Gillette, Wyo.;
• Albertson's, located at 3745 E. Lincoln Way, Cheyenne, Wyo.;
• Max Food and Drug, located at 1600 E. Pershing Blvd., Cheyenne, Wyo.;
• Buttrey Fresh Foods, located at 1526 Rumsey Avenue, Cody, Wyo.;

The two supermarkets that would be divested to Supervalu are:

• Buttrey Fresh Foods, located at 2101 East 12th Street, Casper, Wyo.;
• Buttrey Fresh Foods, located at 4075 Cy Avenue, Casper Wyo.;

Under the terms of the proposed consent order, Albertson's and Buttrey would have to divest the supermarkets within 10 days after the date on which they complete the proposed acquisition or four months after the date they have signed the proposed consent order, whichever is earlier. Alternatively, the companies would have to divest the supermarkets to another acquirer that receives the prior approval of the Commission within three months after the proposed consent order becomes final. If the divestitures are not completed on time, the order would permit the FTC to appoint a trustee to divest supermarkets to satisfy the terms of the proposed consent order.

The consent agreement also would prohibit Albertson's and Buttrey from acquiring, without prior notice to the Commission, supermarket assets located in any entity that owns or operates a supermarket located in Cascade, Gallatin, Lewis and Clark, Missoula, Silver Bow, and Yellowstone counties in Montana, and Albany, Campbell, Laramie, Natrona, and Park counties in Wyoming.

Albertson's and Buttrey also would have to maintain the marketability and viability of all 15 supermarkets pending divestiture.

The Commission vote to announced the proposed consent agreement for public comment was 4-0.

An announcement regarding the proposed consent agreement will be published in the Federal Register shortly. The agreement will be subject to public comment for 60 days, after which the Commission will decide whether to make it final. Comments should be addressed to the FTC, Office of the Secretary, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of $11,000.

Copies of the complaint, proposed consent agreement and the analysis of the proposed agreement to aid public comment are available from the FTC's web site at: http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-FTC-HELP (202-382-4357); TDD for the hearing impaired 1-866-653-4261. Consent agreements subject to public comment also are available by calling 202-326-3627. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710.

(FTC File No. 9810134)