UNITED STATES OF AMERICA In the Matter of ALBERTSON’S, INC., a corporation; File No. 981-0134 AGREEMENT CONTAINING CONSENT ORDER The Federal Trade Commission ("Commission") having initiated an investigation of the proposed acquisition by Albertson’s, Inc. ("Albertson’s") and Locomotive Acquisition Corporation ("Locomotive") of Buttrey Food and Drug Store Company ("Buttrey") from FS Equity Partners II, L.P. ("FS Equity Partners"), and it now appearing that Albertson’s, Locomotive, Buttrey, and FS Equity Partners, hereinafter sometimes referred to as "Proposed Respondents," are willing to enter into an agreement containing a consent order ("Agreement") to divest certain assets and to cease and desist from certain acts, and providing for other relief: IT IS HEREBY AGREED by and among Proposed Respondents, by their duly authorized officers and attorneys, and counsel for the Commission that: 1. Proposed Respondent Albertson’s, Inc. is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business located at 250 East Parkcenter Boulevard, Boise, Idaho 83726. 2. Proposed Respondent Locomotive Acquisition Corporation is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business located at c/o Albertson’s, Inc., 250 East Parkcenter Boulevard, Boise, Idaho 83726. . 3. Proposed Respondent Buttrey Food and Drug Store Company is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Delaware, with its office and principal place of business located at 601 6th Street, S.W., Great Falls, Montana 59404. 4. Proposed Respondent FS Equity Partners II, L.P. is a limited partnership organized, existing, and doing business under and by virtue of the laws of the State of California, with its office and principal place of business located at 11100 Santa Monica Boulevard, Suite 1900, Los Angeles, California 90025. 5. Proposed Respondents admit all the jurisdictional facts set forth in the draft of complaint here attached. 6. Proposed Respondents waive:
7. This Agreement shall not become part of the public record of the proceeding unless and until it is accepted by the Commission. If this Agreement is accepted by the Commission it, together with the draft of complaint contemplated thereby, will be placed on the public record for a period of sixty (60) days and information in respect thereto publicly released. The Commission thereafter may either withdraw its acceptance of this Agreement and so notify the Proposed Respondents, in which event it will take such action as it may consider appropriate, or issue and serve its complaint (in such form as the circumstances may require) and decision, in disposition of the proceeding. 8. This Agreement is for settlement purposes only and does not constitute an admission by Proposed Respondents that the law has been violated as alleged in the draft of complaint here attached, or that the facts as alleged in the draft complaint, other than jurisdictional facts, are true. 9. This Agreement contemplates that, if it is accepted by the Commission, and if such acceptance is not subsequently withdrawn by the Commission pursuant to the provisions of Section 2.34 of the Commission's Rules, the Commission may, without further notice to the Proposed Respondents, (1) issue its complaint corresponding in form and substance with the draft of complaint here attached and its decision containing the following Order to divest and to cease and desist in disposition of the proceeding, and (2) make information public with respect thereto. When so entered, the Order shall have the same force and effect and may be altered, modified, or set aside in the same manner and within the same time provided by statute for other orders. The Order shall become final upon service. Delivery by the United States Postal Service of the complaint and decision containing the agreed-to Order to Proposed Respondents' addresses as stated in this Agreement shall constitute service. Proposed Respondents waive any right they may have to any other manner of service. The complaint may be used in construing the terms of the Order, and no agreement, understanding, representation, or interpretation not contained in the Order or the Agreement may be used to vary or contradict the terms of the Order. 10. Proposed Respondents have read the proposed complaint and Order contemplated hereby. Proposed Respondents understand that once the Order has been issued, they will be required to file one or more compliance reports showing that they have fully complied with the Order. Proposed Respondents further understand that they may be liable for civil penalties in the amount provided by law for each violation of the Order after it becomes final. By signing this Agreement, Proposed Respondents represent that they can accomplish the full relief contemplated by this Agreement. Proposed Respondents agree to be bound by the terms of the proposed order pending its final approval by the Commission. Proposed Respondents agree to comply with the proposed order from the date they sign the Agreement. Proposed Respondents agree that if they divest the Assets To Be Divested pursuant to Paragraphs II.A. and II.B. of the Order prior to the time the Order becomes final, they will include and enforce a provision in the Smith’s Agreement and the Supervalu Agreement requiring the transaction to be rescinded, and the Assets To Be Divested returned to the Proposed Respondents, should the Commission not make the Order final or should the Commission notify Proposed Respondents that either Smith’s or Supervalu is not an acceptable acquirer or that the Smith’s Agreement or the Supervalu Agreement is not an acceptable manner of divestiture. 11. Proposed Respondents shall, within thirty (30) days of the date this Agreement is signed by Proposed Respondents, submit an initial report, pursuant to Section 2.33 of the Commission's Rules, signed by the Proposed Respondents, setting forth in detail the manner in which the Proposed Respondents are complying with the terms of the Asset Maintenance Agreement signed by the Proposed Respondents on August 20, 1998 (attached to this Order and made a part hereof as Appendix I), and how they will comply with Paragraph II of the Order when and if entered. Such report will not become part of the public record unless and until the accompanying Agreement and Order are accepted by the Commission for public comment. ORDER I. IT IS ORDERED that, as used in this Order, the following definitions shall apply: A. "Albertson’s" means Albertson’s, Inc., its directors, officers, employees, agents, representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups and affiliates controlled by Albertson’s, and the respective directors, officers, employees, agents, representatives, successors, and assigns of each. Albertson’s includes Locomotive and, after consummation of the Acquisition, includes Buttrey. B. "Locomotive" means Locomotive Acquisition Corporation, its directors, officers, employees, agents, representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups and affiliates controlled by Locomotive, and the respective directors, officers, employees, agents, representatives, successors, and assigns of each. Locomotive is a wholly- owned subsidiary of Albertson’s. C. "Buttrey" means Buttrey Food and Drug Store Company, its directors, officers, employees, agents, representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups and affiliates controlled by Buttrey, and the respective directors, officers, employees, agents, representatives, successors, and assigns of each. D. "FS Equity Partners" means FS Equity Partners II, L.P., its predecessors, successors, assigns, subsidiaries, divisions, groups and affiliates controlled by FS Equity Partners and their respective general partners, officers, employees, agents, representatives, and the respective successors and assigns of each. FS Equity Partners owns a majority of the voting securities of Buttrey. E. "Respondents" means Albertson’s, Locomotive, Buttrey, and FS Equity Partners, individually and collectively. F. "Commission" means the Federal Trade Commission. G. "Acquisition" means Albertson’s and Locomotive’s proposed acquisition of all of the outstanding voting securities of and merger with Buttrey pursuant to the Agreement and Plan of Merger dated January 19, 1998. H. "Assets To Be Divested" means the Supermarkets identified in Schedule A and Schedule B of this Order and all assets, leases, properties, permits (to the extent transferable), customer lists, businesses and goodwill, tangible and intangible, related to or utilized in the Supermarket business operated at those locations, but shall not include those assets consisting of or pertaining to any of the Respondents' trade marks, trade dress, service marks, or trade names. I. "Supermarket" means a full-line retail grocery store that carries a wide variety of food and grocery items in particular product categories, including bread and dairy products; refrigerated and frozen food and beverage products; fresh and prepared meats and poultry; produce, including fresh fruits and vegetables; shelf-stable food and beverage products, including canned and other types of packaged products; staple foodstuffs, which may include salt, sugar, flour, sauces, spices, coffee, and tea; and other grocery products, including nonfood items such as soaps, detergents, paper goods, other household products, and health and beauty aids. J. "Smith’s" means Smith’s Food & Drug Centers, Inc., a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its principal place of business located at 1550 South Redwood Road, Salt Lake City, Utah 84104. Smith’s is a wholly-owned subsidiary of Fred Meyer, Inc. K. "Supervalu" means Supervalu Inc., a corporation organized, existing and doing business under and by virtue of the laws of the State of Delaware, with its principal place of business located at 11840 Valley View Road, Eden Prairie, Minnesota 55344; and Supervalu Holdings, Inc. a corporation organized, existing and doing business under and by virtue of the laws of the State of Missouri, with its principal place of business located at 11840 Valley View Road, Eden Prairie, Minnesota 55344. Supervalu Holdings, Inc. is a wholly-owned subsidiary of Supervalu Inc. L. "Smith’s Agreement" means the Purchase Agreement between Smith’s and Albertson’s executed on August 10, 1998, and all subsequent amendments thereto, for the divestiture by Respondents to Smith’s of the Schedule A Assets To Be Divested. M. "Supervalu Agreement" means the Purchase Agreement between Supervalu and Albertson’s executed on August 12, 1998, and all subsequent amendments thereto, for the divestiture by Respondents to Supervalu of the Schedule B Assets To Be Divested. N. "Acquirer(s)" means Smith’s and Supervalu, and/or the entity or entities approved by the Commission to acquire the Assets To Be Divested pursuant to this Order, individually and collectively. O. "Third Party Consents" means all consents from any other person, including all landlords, that are necessary to effect the complete transfer to the Acquirer(s) of the assets required to be divested pursuant to this Order. II. IT IS FURTHER ORDERED that: A. Respondents shall divest, absolutely and in good faith, the Schedule A Assets To Be Divested to:
Respondents shall obtain all required Third Party Consents prior to the closing of the Smith’s Agreement or any other agreement pursuant to which the Schedule A Assets To Be Divested are divested to an Acquirer. B. Respondents shall divest, absolutely and in good faith, the Schedule B Assets To Be Divested to:
Respondents shall obtain all required Third Party Consents prior to the closing of the Supervalu Agreement or any other agreement pursuant to which the Schedule B Assets To Be Divested are divested to an Acquirer. C. A condition of approval by the Commission of the divestiture transaction described in Paragraph II.B. shall be a written agreement by Supervalu that it will not sell or lease the Schedule B Assets To Be Divested, for a period of three (3) years from the date on which this Order becomes final, directly or indirectly, through subsidiaries, partnerships or otherwise, without the prior approval of the Commission. D. The purpose of the divestitures is to ensure the continuation of the Assets To Be Divested as ongoing viable enterprises engaged in the supermarket business and to remedy the lessening of competition resulting from the Acquisition alleged in the Commission's complaint. III. IT IS FURTHER ORDERED that: A. If Respondents have not divested, absolutely and in good faith and with the Commission’s prior approval, the Assets To Be Divested within the time required by Paragraph II of this Order, the Commission may appoint a trustee to divest the Assets To Be Divested. In the event that the Commission or the Attorney General brings an action pursuant to § 5(l) of the Federal Trade Commission Act, 15 U.S.C. § 45(l), or any other statute enforced by the Commission, Respondents shall consent to the appointment of a trustee in such action. Neither the appointment of a trustee nor a decision not to appoint a trustee under this Paragraph shall preclude the Commission or the Attorney General from seeking civil penalties or any other relief available to it, including a court-appointed trustee, pursuant to § 5(l) of the Federal Trade Commission Act, or any other statute enforced by the Commission, for any failure by the Respondents to comply with this Order. B. If a trustee is appointed by the Commission or a court pursuant to Paragraph III.A. of this Order, Respondents shall consent to the following terms and conditions regarding the trustee's powers, duties, authority, and responsibilities:
IV. IT IS FURTHER ORDERED that: A. Pending divestiture of the Assets To Be Divested pursuant to this Order, Respondents shall take such actions as are necessary to maintain the viability, competitiveness, and marketability of the Assets To Be Divested, and to prevent the destruction, removal, wasting, deterioration, or impairment of any of Assets To Be Divested except for ordinary wear and tear. B. Respondents shall comply with all the terms of the Asset Maintenance Agreement attached to this Order and made a part hereof as Appendix I. The Asset Maintenance Agreement shall continue in effect until such time as all Assets To Be Divested have been divested as required by this Order. V. IT IS FURTHER ORDERED that, for a period of ten (10) years from the date this Order becomes final, Albertson’s shall not, without providing advance written notification to the Commission, directly or indirectly, through subsidiaries, partnerships, or otherwise: A. Acquire any ownership or leasehold interest in any facility that has operated as a supermarket within six (6) months of the date of such proposed acquisition in Cascade, Gallatin, Lewis and Clark, Missoula, Silver Bow, and Yellowstone counties in Montana, and Albany, Campbell, Laramie, Natrona, and Park counties in Wyoming. B. Acquire any stock, share capital, equity, or other interest in any entity that owns any interest in or operates any supermarket or owned any interest in or operated any supermarket within six (6) months of such proposed acquisition in Cascade, Gallatin, Lewis and Clark, Missoula, Silver Bow, and Yellowstone counties in Montana, and Albany, Campbell, Laramie, Natrona, and Park counties in Wyoming. Provided, however, that advance written notification shall not apply to the construction of new facilities by Albertson’s or the acquisition of or leasing of a facility that has not operated as a supermarket within six (6) months of Albertson’s offer to purchase or lease. Said notification shall be given on the Notification and Report Form set forth in the Appendix to Part 803 of Title 16 of the Code of Federal Regulations as amended (hereinafter referred to as "the Notification"), and shall be prepared and transmitted in accordance with the requirements of that part, except that no filing fee will be required for any such notification, notification shall be filed with the Secretary of the Commission, notification need not be made to the United States Department of Justice, and notification is required only of Albertson’s and not of any other party to the transaction. Albertson’s shall provide the Notification to the Commission at least thirty days prior to consummating any such transaction (hereinafter referred to as the "first waiting period"). If, within the first waiting period, representatives of the Commission make a written request for additional information or documentary material (within the meaning of 16 C.F.R. § 803.20), Albertson’s shall not consummate the transaction until twenty days after submitting such additional information or documentary material. Early termination of the waiting periods in this Paragraph may be requested and, where appropriate, granted by letter from the Bureau of Competition. Provided, however, that prior notification shall not be required by this Paragraph for a transaction for which notification is required to be made, and has been made, pursuant to Section 7A of the Clayton Act, 15 U.S.C. § 18a. VI. IT IS FURTHER ORDERED that, for a period of ten (10) years commencing on the date this Order becomes final: A. Albertson’s shall neither enter into nor enforce any agreement that restricts the ability of any person (as defined in Section 1(a) of the Clayton Act, 15 U.S.C. § 12(a)) that acquires any supermarket, any leasehold interest in any supermarket, or any interest in any retail location used as a supermarket on or after January 1, 1998, in Cascade, Gallatin, Lewis and Clark, Missoula, Silver Bow, and Yellowstone counties in Montana, and Albany, Campbell, Laramie, Natrona, and Park counties in Wyoming to operate a supermarket at that site if such supermarket was formerly owned or operated by Albertson’s. B. Albertson’s shall not remove any equipment from a supermarket owned or operated by Albertson’s in Cascade, Gallatin, Lewis and Clark, Missoula, Silver Bow, and Yellowstone counties in Montana, and Albany, Campbell, Laramie, Natrona, and Park counties in Wyoming, prior to a sale, sublease, assignment, or change in occupancy, except for replacement or relocation of such equipment in or to any other supermarket owned or operated by Albertson’s in the ordinary course of business, or except as part of any negotiation for a sale, sublease, assignment, or change in occupancy of such supermarket. VII. IT IS FURTHER ORDERED that: A. Within thirty (30) days after the date Respondents signed the Agreement Containing Consent Order and every thirty (30) days thereafter until Respondents have fully complied with the provisions of Paragraphs II, III, and IV of this Order, Respondents shall submit to the Commission verified written reports setting forth in detail the manner and form in which they intend to comply, are complying, and have complied with Paragraphs II, III, and IV of this Order. Respondents shall include in their compliance reports, among other things that are required from time to time, a full description of the efforts being made to comply with Paragraphs II, III, and IV of the Order, including a description of all substantive contacts or negotiations for divestitures and the identity of all parties contacted. Respondents shall include in their compliance reports copies of all written communications to and from such parties, all internal memoranda, and all reports and recommendations concerning divestiture. B. One (1) year from the date this Order becomes final, annually for the next nine (9) years on the anniversary of the date this Order becomes final, and at other times as the Commission may require, Albertson’s shall file verified written reports with the Commission setting forth in detail the manner and form in which it has complied and is complying with this Order. VIII. IT IS FURTHER ORDERED that Respondents shall notify the Commission at least thirty (30) days prior to any proposed change in the corporate Respondents such as dissolution, assignment, sale resulting in the emergence of a successor corporation, or the creation or dissolution of subsidiaries or any other change in Respondents that may affect compliance obligations arising out of the Order. IX. IT IS FURTHER ORDERED that, for the purpose of determining or securing compliance with this Order, upon written request, Respondents shall permit any duly authorized representative of the Commission: A. Access, during office hours and in the presence of counsel, to inspect and copy all books, ledgers, accounts, correspondence, memoranda and other records and documents in the possession or under the control of Respondents relating to any matters contained in this Order; and B. Upon five (5) days' notice to Respondents and without restraint or interference from Respondents, to interview Respondents or officers, directors, or employees of Respondents in the presence of counsel. X. IT IS FURTHER ORDERED that, upon consummation of the Acquisition, the obligations of Respondent FS Equity Partners under this Order shall terminate. Signed this _____ day of August, 1998 ALBERTSON’S, INC., a corporation By: ____________________________________ LOCOMOTIVE ACQUISITION CORPORATION By: ____________________________________ BUTTREY FOOD AND DRUG STORE COMPANY, a corporation By: ____________________________________ FS EQUITY PARTNERS II, L.P., a partnership By: By: ____________________________________ FEDERAL TRADE COMMISSION By: APPROVED: ____________________________________ ____________________________________ Schedule A 1. The following supermarket located in Cascade County, Montana:
2. The following supermarket located in Gallatin County, Montana:
3. The following supermarket located in Lewis and Clark County, Montana:
4. The following supermarket located in Missoula County, Montana:
5. The following supermarkets located in Silver Bow County, Montana:
6. The following supermarkets located in Yellowstone County, Montana:
7. The following supermarket located in Albany County, Wyoming:
8. The following supermarket located in Campbell County, Wyoming:
9. The following supermarkets located in Laramie County, Wyoming:
10. The following supermarket located in Park County, Wyoming:
Schedule B 1. The following supermarkets located in Natrona County, Wyoming:
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