UNITED STATES OF AMERICA In the Matter of File No. 991-0024 AGREEMENT CONTAINING CONSENT ORDER The Federal Trade Commission ("Commission"), having initiated an investigation of the proposed acquisition by The Kroger Co. ("Kroger") of Fred Meyer, Inc. ("Fred Meyer"), and it now appearing that Kroger and Fred Meyer, 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, and that Fleming Companies, Inc. ("Fleming"), intends to purchase for resale to another purchaser some of the assets to be divested pursuant to this Agreement and is, accordingly, a party to the Agreement necessary for effective relief: IT IS HEREBY AGREED by and among Proposed Respondents and Fleming, by their duly authorized officers and attorneys, and counsel for the Commission that: 1. Proposed Respondent Kroger is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Ohio, with its office and principal place of business located at 1014 Vine Street, Cincinnati, Ohio 45202. 2. Proposed Respondent Fred Meyer 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 3800 Southeast 22nd Avenue, Portland, Oregon 97202. 3. Fleming is a corporation organized, existing and doing business under and by virtue of the laws of the State of Oklahoma, with its principal place of business located at 6301 Waterford Boulevard, Oklahoma City, Oklahoma 73126. 4. Proposed Respondents admit all the jurisdictional facts set forth in the draft of complaint here attached. 5. Proposed Respondents and Fleming waive:
6. 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 and Fleming, 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. 7. This Agreement is for settlement purposes only and does not constitute an admission by Proposed Respondents or Fleming 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. 8. 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 or Fleming, (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 U.S. Postal Service of the complaint and decision containing the agreed-to order to Proposed Respondents' and Fleming's addresses as stated in this agreement shall constitute service. Proposed Respondents and Fleming 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. 9. Proposed Respondents and Fleming 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 and Fleming 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 and Fleming represent that they can accomplish the full relief contemplated by this Agreement. 10. Proposed Respondents and Fleming agree to comply with the proposed order from the date they sign the Agreement. Proposed Respondents agree that, in the event that the Commission withdraws its acceptance of this Agreement pursuant to the provisions of Section 2.34 of the Commission's Rules, Proposed Respondents will continue complying with Paragraph V. of the proposed order until three (3) business days after the Commission withdraws such acceptance. 11. Within thirty (30) days of the date on which they sign this Agreement, Proposed Respondents shall submit an initial report, pursuant to Section 2.33 of the Commission's Rules, setting forth in detail the manner in which they are complying, and will comply, with the terms of Paragraphs II. and V. of the Order. Such report will not become part of the public record unless and until the Commission accepts the Agreement for public comment. ORDER I. IT IS ORDERED that, as used in this Order, the following definitions shall apply:
II. IT IS FURTHER ORDERED that: A. Respondents shall divest, absolutely and in good faith, the Schedule A Assets to Albertson's, in accordance with the Albertson's Agreement (which agreement shall not be construed to vary or contradict the terms of this Order), no later than
whichever is earlier. Provided, however, that if Respondents have divested the Schedule A Assets to Albertson's pursuant to the Albertson's Agreement prior to the date the Order becomes final, and if, at the time the Commission determines to make the Order final, the Commission notifies Respondents that Albertson's is not an acceptable acquirer or that the Albertson's Agreement is not an acceptable manner of divestiture, then Respondents shall immediately rescind the transaction with Albertson's and shall divest the Schedule A Assets within three (3) months of the date the Order becomes final, absolutely and in good faith, at no minimum price, to an acquirer that receives the prior approval of the Commission and only in a manner that receives the prior approval of the Commission. B. Respondents shall divest, absolutely and in good faith, the Schedule B Assets to Fleming in accordance with the Fleming Agreement (which agreement shall not be construed to vary or contradict the terms of this Order), no later than
whichever is earlier. Provided, however, that if Respondents have divested the Schedule B Assets to Fleming pursuant to the Fleming Agreement prior to the date the Order becomes final, and if, at the time the Commission determines to make the Order final, the Commission notifies Respondents that Fleming is not an acceptable acquirer or that the Fleming Agreement is not an acceptable manner of divestiture, then Respondents shall immediately rescind the transaction with Fleming, and shall divest the Schedule B Assets within three (3) months of the date the Order becomes final, absolutely and in good faith, at no minimum price, to an acquirer that receives the prior approval of the Commission and only in a manner that receives the prior approval of the Commission. C. Respondents shall divest, absolutely and in good faith, the Schedule C Assets to Nash-Finch, in accordance with the Nash-Finch Agreement (which agreement shall not be construed to vary or contradict the terms of this Order), no later than
whichever is earlier. Provided, however, that if Respondents have divested the Schedule C Assets to Nash-Finch pursuant to the Nash-Finch Agreement prior to the date the Order becomes final, and if, at the time the Commission determines to make the Order final, the Commission notifies Respondents that Nash-Finch is not an acceptable acquirer or that the Nash-Finch Agreement is not an acceptable manner of divestiture, then Respondents shall immediately rescind the transaction with Nash-Finch and shall divest the Schedule C Assets within three (3) months of the date the Order becomes final, absolutely and in good faith, at no minimum price, to an acquirer that receives the prior approval of the Commission and only in a manner that receives the prior approval of the Commission. D. Respondents shall obtain all required Third Party Consents prior to the closing of the Albertson's Agreement, the Fleming Agreement, the Nash-Finch Agreement, or any other agreement pursuant to which the Assets To Be Divested are divested to an Acquirer. E. 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, if Fleming purchases any Schedule B Wyoming Assets, Fleming shall sell or otherwise convey, directly or indirectly, any such Schedule B Wyoming Assets, only to an Acquirer approved by the Commission and only in a manner that receives the prior approval of the Commission. Fleming shall comply with this Paragraph until three (3) years after the date this Order becomes final. IV. 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 Section 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 Section 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 IV.A. of this Order, Respondents shall consent to the following terms and conditions regarding the trustee's powers, duties, authority, and responsibilities:
V. IT IS FURTHER ORDERED that Respondents shall maintain the viability, marketability, and competitiveness of the Assets To Be Divested, and shall not cause the wasting or deterioration of the Assets To Be Divested, nor shall they cause the Assets To Be Divested to be operated in a manner inconsistent with applicable laws, nor shall they sell, transfer, encumber or otherwise impair the viability, marketability or competitiveness of the Assets To Be Divested. Respondents shall comply with the terms of this Paragraph until such time as Respondents have divested the Assets To Be Divested pursuant to the terms of this order. Respondents shall conduct or cause to be conducted the business of the Assets To Be Divested in the regular and ordinary course and in accordance with past practice (including regular repair and maintenance efforts) and shall use their best efforts to preserve the existing relationships with suppliers, customers, employees, and others having business relations with the Assets To Be Divested in the ordinary course of business and in accordance with past practice. Respondents shall not terminate the operation of any Supermarket To Be Divested. Respondents shall continue to maintain the inventory of each Supermarket To Be Divested at levels and selections (e.g., stock-keeping units) consistent with those maintained by such Respondent(s) at such Supermarket in the ordinary course of business consistent with past practice. Respondents shall use best efforts to keep the organization and properties of each Supermarket To Be Divested intact, including current business operations, physical facilities, working conditions, and a work force of equivalent size, training, and expertise associated with the Supermarket. Included in the above obligations, Respondents shall, without limitation:
VI. IT IS FURTHER ORDERED that, for a period of ten (10) years from the date this order becomes final, Kroger shall not, directly or indirectly, through subsidiaries, partnerships, or otherwise, without providing advance written notification to the Commission:
Provided, however, that advance written notification shall not apply to the construction of new facilities by Kroger or the acquisition of or leasing of a facility that has not operated as a Supermarket within six (6) months prior to Kroger'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 Kroger and not of any other party to the transaction. Kroger 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), Kroger shall not consummate the transaction until twenty days after substantially complying with such request. 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. VII. IT IS FURTHER ORDERED that, for a period of ten (10) years commencing on the date this Order becomes final:
VIII. IT IS FURTHER ORDERED that:
IX. 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. X. IT IS FURTHER ORDERED that, for the purpose of determining or securing compliance with this Order, upon written request with five (5) days' notice, Respondents and Fleming shall permit any duly authorized representative of the Commission:
Signed this _____ day of April, 1999 THE KROGER CO., a corporation FRED MEYER, INC., a corporation FLEMING COMPANIES, INC., a corporation FEDERAL TRADE COMMISSION Jill M. Frumin APPROVED: ____________________________________ ____________________________________ ____________________________________ Schedule A All Supermarkets in Price, Utah, in which Kroger had a financial interest prior to the consummation of the Acquisition, including, but not limited to, the Supermarket operated under the name "City Market" at 760 Price River Drive, Price, Utah 84501. ------------------------------------------------------------------------------ Schedule B 1. All Supermarkets in Rock Springs, Wyoming, in which Kroger had a financial interest prior to the consummation of the Acquisition, including, but not limited to, the Supermarket operated under the name "City Market" at 401 N. Center, Rock Springs, Wyoming 82901. 2. All Supermarkets in Green River, Wyoming, in which Kroger had a financial interest prior to the consummation of the Acquisition, including, but not limited to, the Supermarket operated under the name "City Market" at 400 Uinta Avenue, Green River, Wyoming 82935. 3. All Supermarkets in Prescott, Arizona, in which Kroger had a financial interest prior to the consummation of the Acquisition, including, but not limited to, the Supermarket operated under the name "Fry's" at 1519 W. Gurley Road, Prescott, Arizona 86301. 4. All Supermarkets in Yuma, Arizona, in which Kroger had a financial interest prior to the consummation of the Acquisition, including, but not limited to, the Supermarket operated under the name "Fry's" at 2600 West 16th Street, Yuma, Arizona 85364. 5. All Supermarkets in Sierra Vista, Arizona, in which Fred Meyer had a financial interest prior to the consummation of the Acquisition, including, but not limited to, the Supermarket operated under the name "Smith's" at 85 South Highway 92, Sierra Vista, Arizona 85635. ------------------------------------------------------------------------------ Schedule C All Supermarkets in Cheyenne, Wyoming, in which Fred Meyer had a financial interest prior to the consummation of the Acquisition, including, but not limited to:
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