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UNITED STATES OF AMERICA In the Matter of SHAW'S SUPERMARKETS, INC., a
corporation; AGREEMENT CONTAINING CONSENT ORDER The Federal Trade Commission ("Commission") having initiated an investigation of the proposed acquisition of Star Markets Holdings, Inc. ("Star Markets") by J Sainsbury plc and its wholly-owned subsidiary Shaw's Supermarkets, Inc. ("Shaw's"), and it now appearing that J Sainsbury, Shaw's, and Star Markets, hereinafter sometimes referred to as "Proposed Respondents," are willing to enter into an agreement containing a consent order ("Agreement") to divest certain assets, cease and desist from certain acts, and provide 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 J Sainsbury is a corporation organized, existing, and doing business under and by virtue of the laws of England, with its office and principal place of business located at Stamford House, Stamford Street, London SE 19LL, England. 2. Proposed Respondent Shaw's, a wholly-owned subsidiary of J Sainsbury, is a corporation organized, existing, and doing business under and by virtue of the laws of Massachusetts, with its office and principal place of business located at 140 Laurel Street, P.O. Box 600, East Bridgewater, Massachusetts 02333. 3. Proposed Respondent Star Markets is a corporation organized, existing, and doing business under and by virtue of the laws of the State of Massachusetts, with its office and principal place of business located at 625 Mt. Auburn Street, Cambridge, MA 02138. 4. Proposed Respondents admit all the jurisdictional facts set forth in the draft of complaint here attached. 5. Proposed Respondents 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, 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 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, (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 respondent's address 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. 9. 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. 10. Proposed Respondents 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 IV. 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 IV. 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: A. "J Sainsbury" means J Sainsbury plc, its directors, officers, employees, agents, representatives, predecessors, successors, and assigns; its subsidiaries, including but not limited to Shaw's Supermarkets, divisions, groups, and affiliates controlled by J Sainsbury, and the respective directors, officers, employees, agents, representatives, successors, and assigns of each. J Sainsbury, after consummation of the Acquisition, includes Star Markets. B. "Shaw's" means Shaw's Holdings Inc., its directors, officers, employees, agents, representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups, and affiliates controlled by Shaw's and the respective directors, officers, employees, agents, representatives, successors, and assigns of each. C. "Star Markets" means Star Markets Holdings, Inc., its directors, officers, employees, agents, representatives, predecessors, successors, and assigns; its subsidiaries, divisions, groups, and affiliates controlled by Star Markets, and the respective directors, officers, employees, agents, representatives, successors, and assigns of each. D. "Respondents" means J Sainsbury, Shaw's, and Star Markets, individually and collectively. E. "Commission" means the Federal Trade Commission. F. "Acquisition" means J Sainsbury's proposed acquisition of Star Markets pursuant to the Stock Purchase Agreement dated November 25, 1998. G. "Assets To Be Divested" means the Schedule A Assets, Schedule B Assets, Schedule C Assets, Schedule D Assets and Schedule E Assets. H. "Schedule A Assets" means the Supermarkets identified in Schedule A of this Order and all assets, leases, properties, government 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. "Schedule B Assets" means the Supermarkets identified in Schedule B of this Order and all assets, leases, properties, government 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. J. "Schedule C Assets" means the Supermarkets identified in Schedule C of this Order and all assets, leases, properties, government 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. K. "Schedule D Assets" means the Supermarkets identified in Schedule D of this Order and all assets, leases, properties, government 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. L. "Schedule E Assets" means the Supermarkets identified in Schedule E of this Order and all assets, leases, properties, government 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 Respondent's trade marks trade dress, service marks, or trade names. M. "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; frozen and refrigerated 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. N. "Victory" means Victory Super Markets, a corporation organized, existing and doing business under and by virtue of the laws of the State of Massachusetts, with its principal place of business located at 75 North Main Street, Leominster, MA 01453. O. "Foodmaster" means Foodmaster Super Markets, Inc., a corporation organized, existing and doing business under and by virtue of the laws of the State of Massachusetts, with its principal place of business located at 100 Everett Avenue, Unit 12, Chelsea, MA 02150. P. "Victory Agreement" means the Purchase Agreement between Shaw's Holdings Inc., Shaw's Supermarkets, Inc. and Victory Distributors, Inc. executed on May 27, 1999, for the divestiture by Respondents to Victory of the Schedule A Assets. Q. "Foodmaster Agreement" means the Agreement of Purchase and Sale of Assets and Assignments of Leases between Shaw's Holdings Inc. and Foodmaster Super Markets, Inc. executed on May 26, 1999, along with amended provisions as set forth in the June 9, 1999, letter from Verne Powell, Shaw's Holdings, Inc. to Lawrence A. Sperber, Attorney for Foodmaster Supermarkets, Inc. and the two letters from Verne Powell to John A. DeJesus, Foodmaster Super Market, Inc. dated June 14, 1999, for the divestiture by Respondents to Foodmaster of the Schedule B Assets. R. "Acquirer" means Victory and Foodmaster and/or any other entity or entities approved by the Commission to acquire the Assets To Be Divested pursuant to this Order, individually and collectively. S. "Relevant Areas" means the county or counties that include the following incorporated cities and towns in Massachusetts:
T. "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 To Be Divested. II. IT IS FURTHER ORDERED that: A. Respondents shall divest, absolutely and in good faith, the Schedule A Assets to Victory, in accordance with the Victory 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 Victory pursuant to the Victory 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 Victory is not an acceptable acquirer or that the Victory Agreement is not an acceptable manner of divestiture, then Respondents shall immediately rescind the transaction with Victory 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 Foodmaster, in accordance with the Foodmaster Agreement (which agreement shall not be construed to vary or contradict the terms of this Order), within ten (10) days of the date on which the Order becomes final. Provided, however, that if Respondents have divested the Schedule B Assets to Foodmaster pursuant to the Foodmaster 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 Foodmaster is not an acceptable acquirer or that the Foodmaster Agreement is not an acceptable manner of divestiture, then Respondents shall immediately rescind the transaction with Foodmaster 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 obtain all required Third Party Consents prior to the closing of each of the respective divestiture Agreements, or any other agreement pursuant to which the Assets To Be Divested are divested to an Acquirer. D. The purpose of the divestitures is to ensure the continuation of the Schedule A Assets and Schedule B Assets 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. Respondents shall divest to a single acquirer, absolutely and in good faith and at no minimum price, within three (3) months from the date on which Respondents sign the Agreement Containing Consent Order, the Schedule C Assets. B. Respondents shall divest the Schedule C Assets only 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. The purpose of the divestiture is to ensure the continuation of the Schedule C Assets 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. IV. IT IS FURTHER ORDERED that: A. Respondents shall divest to a single acquirer, absolutely and in good faith and at no minimum price, within three (3) months from the day on which Respondents sign the Agreement Containing Consent Order, the Schedule E Assets. B. Respondents shall divest the Schedule E Assets only 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. The purpose of the divestiture is to ensure the continuation of the Schedule E Assets 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. V. IT IS FURTHER ORDERED that: A. If Respondents have not divested the Assets To Be Divested within the time periods required by Paragraphs II. III. and IV. of this Order, absolutely and in good faith and with the Commission's prior approval, the Commission may appoint a trustee to divest those assets that Respondents have failed to divest. If Respondents have failed to divest the Schedule C Assets as required by Paragraph II.C. above, the trustee may divest the assets listed in Schedule C or Schedule D. 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:
VI. IT IS FURTHER ORDERED that Respondents shall maintain the viability, marketability, and competitiveness of the Assets To Be Divested pending their divestiture, 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 of the Assets To Be Divested. Respondents shall continue to maintain the inventory of each of the Assets 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 of the Assets 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:
VII. IT IS FURTHER ORDERED that, for a period of ten (10) years from the date this Order becomes final, J Sainsbury 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 J Sainsbury or the acquisition of or leasing of a facility that has not operated as a Supermarket within six (6) months prior to J Sainsbury'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 J Sainsbury and not of any other party to the transaction. J Sainsbury 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), J Sainsbury 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. VIII. IT IS FURTHER ORDERED that, for a period of ten (10) years from the date this Order becomes final:
IX. 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, IV, V 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, IV, and V 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, IV, and V 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, J Sainsbury 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. X. 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. XI. IT IS FURTHER ORDERED that, for the purpose of determining or securing compliance with this Order, upon written request with five (5) days' notice to Respondents, Respondents shall permit any duly authorized representative of the Commission: A. Access, during office hours and in the presence of counsel, to inspect the facilities and 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. Without restraint or interference from Respondents, to interview Respondents or officers, directors, or employees of Respondents in the presence of counsel. XII. IT IS FURTHER ORDERED, that if (i) Respondents have fully complied with all terms of Paragraphs IV through X of this Order; (ii) Respondents within forty-five (45) days after final issuance of this Order by the Commission have submitted a complete application in support of the divestiture of the Assets To Be Divested pursuant to Paragraphs II. and III. of this Order, as the case may be (including the buyer, manner of divestiture and all other matters subject to Commission approval); and (iii) the Commission has approved the divestiture and has not withdrawn its acceptance; but (iv) Respondents have certified to the Commission within ten (10) days after the Commission's approval of the divestiture that the State of Massachusetts, not withstanding timely and complete application by Respondents to the State of Massachusetts, has failed to approve the divestiture under an Applicable Consent Decree of the particular assets or businesses whose divestiture is also required under this Order, then with respect to the particular divestiture that remains unconsummated, the time in which the divestiture is required under this Order to be completed shall be extended for sixty (60) days. During such sixty (60) day period, Respondents shall exercise utmost good faith and best efforts to resolve the concerns of the State of Massachusetts. Signed this ___ day of June 1999. J SAINSBURY PLC, a corporation By: SHAW'S SUPERMARKETS, INC., a corporation By: _______________________ STAR MARKETS HOLDINGS, INC., a corporation By: FEDERAL TRADE COMMISSION By: APPROVED: ____________________________________ ____________________________________ Schedule A The Schedule A Assets consists of all assets, leases, properties, government permits, customer lists, businesses and goodwill, tangible and intangible, related to or utilized in the Supermarket business operated at the following locations in eastern Massachusetts, excluding the trade marks, trade dress, service marks, or trade names of Respondents:
Schedule B The Schedule B Assets consists of all assets, leases, properties, government permits, customer lists, businesses and goodwill, tangible and intangible, related to or utilized in the Supermarket business operated at the following locations in eastern Massachusetts, excluding the trade marks, trade dress, service marks, or trade names of Respondents:
Schedule C The Schedule C Assets consists of all assets, leases, properties, government permits, customer lists, businesses and goodwill, tangible and intangible, related to or utilized in the Supermarket business operated at the following locations in eastern Massachusetts, excluding the trade marks, trade dress, service marks, or trade names of Respondents:
Schedule D The Schedule D Assets consists of all assets, leases, properties, government permits, customer lists, businesses and goodwill, tangible and intangible, related to or utilized in the Supermarket business operated at the following locations in eastern Massachusetts, excluding the trade marks, trade dress, service marks, or trade names of Respondents:
Schedule E The Schedule E Assets consist of all assets, leases, government permits, customer lists, businesses and goodwill, tangible and intangible, related to or utilized in the Supermarket business operated at the following locations in eastern Massachusetts, excluding the trade marks, trade dress, service markets, or trade names of Respondents:
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