Schnuyck Markets, Inc.; Proposed Consent Agreement With Analysis to Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 941 0131]

Schnuyck Markets, Inc.; Proposed Consent Agreement With Analysis

to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: In settlement of alleged violations of federal law prohibiting

unfair acts and practices and unfair methods of competition-- in

connection with Schnuck Markets' proposed acquisition of supermarkets

currently owned by National Holdings, Inc.--this consent agreement,

accepted subject to final Commission approval, would require, among

other things, the Missouri-based corporation to divest 24 stores in the

St. Louis area to Commission-approved purchasers, and would require the

respondent, for ten years, to obtain Commission approval before

acquiring an interest in a supermarket, or another entity that operates

a supermarket, in the relevant area.

DATES: Comments must be received on or before May 15, 1995.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

Room 159, 6th St. and Pa. Ave., N.W., Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT: Ronald Rowe, FTC/S-2105, Washington,

D.C. 20580. (202) 326-2610.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal

Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the

Commission's Rules of Practice (16 CFR 2.34), notice is hereby given

that the following consent agreement containing a consent order to

cease and desist, having been filed with and accepted, subject to final

approval, by the Commission, has been placed on the public record for a

period of sixty (60) days. Public comment is invited. Such comments or

review will be considered by the Commission and will be available for

inspection and copying at its principal office in accordance with

Sec. 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR

4.9(b)(6)(ii)).

Agreement Containing Consent Order

The Federal Trade Commission (``Commission'') having initiated an

investigation of Schnuck Markets, Inc.'s (``Schnucks'') proposed

acquisition of certain assets of National Holdings, Inc. and certain

affiliates (``National''), and it now appearing that Schnucks,

hereinafter sometimes referred to as ``proposed respondent,'' is

willing to [[Page 13989]] enter into an agreement containing an Order

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 respondent, its duly

authorized officers and attorneys, and counsel for the Commission that:

1. Proposed respondent Schnuck Markets, Inc. is a corporation

organized, existing, and doing business under and by virtue of the laws

of the State of Missouri, with its office and principal place of

business located at 11420 Lackland Road, St. Louis, MO 63146-6928.

2. Proposed respondent admits all the jurisdictional facts set

forth in the draft of complaint.

3. Proposed respondent waives:

a. Any further procedural steps;

b. The requirement that the Commission's decision contain a

statement of findings of fact and conclusions of law;

c. All rights to seek judicial review or otherwise to challenge or

contest the validity of the Order entered pursuant to this agreement;

and

d. Any claim under the Equal Access to Justice Act.

4. 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 respondent, 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.

5. This agreement is for settlement purposes only and does not

constitute an admission by proposed respondent that the law has been

violated as alleged in the draft of the complaint, or that the facts as

alleged in the draft complaint, other than jurisdictional facts, are

true.

6. 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 Sec. 2.34 of the Commission's

Rules, the Commission may, without further notice to the proposed

respondent, (1) Issue its complaint corresponding in form and substance

with the draft of the complaint 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 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 respondent's address as

stated in this Agreement shall constitute service. Proposed respondent

waives any right it 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.

7. Proposed respondent has read the proposed complaint and Order

contemplated hereby. Proposed respondent understands that once the

Order has been issued, it will be required to file verified written

reports showing that it has fully complied with the Order. Proposed

respondent further understands that it may be liable for civil

penalties in the amount provided by law for each violation of the Order

after it becomes final.

Order

I

It is ordered that, as used in this Order, the following

definitions shall apply:

A. Respondent or Schnuck Markets, Inc. means Schnuck Markets, Inc.,

its predecessors, subsidiaries, divisions, and groups and affiliates

controlled by Schnuck Markets, Inc., their successors and assigns, and

their directors, officers, employees, agents, and representatives.

B. Assets to be divested means the supermarket assets described in

Paragraph II.A. of this Order.

C. Commission means the Federal Trade Commission.

D. 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.

E. The term St. Louis MSA means the metropolitan statistical area

consisting of the following areas: in Missouri, the counties of

Franklin, Jefferson, Lincoln, St. Charles, St. Louis, Warren, and the

city of St. Louis; in Illinois, the counties of Clinton, Jersey,

Madison, Monroe, and St. Clair.

II

It is further ordered that:

A. Respondent shall divest, absolutely and in good faith, within

twelve months from the date this Order becomes final:

1. The following supermarkets located in the city of St. Louis,

Missouri:

a. National Store no. 15 located at 2700 S. Grand Avenue, St. Louis, MO

63118;

b. National store no. 30 located at 5433 Southwest Avenue, St. Louis,

MO 63139;

c. National store no. 50 located at 8945 Riverview Drive, St. Louis, MO

63137; and

d. National store no. 60 located at 1605 S. Jefferson, St. Louis, MO

63104.

2. The following supermarkets located in St. Louis County,

Missouri:

a. National store no. 26 located at 8823 Ladue Road, Ladue, MO 63124;

b. National store no. 45 located at 6 S. Old Orchard, Webster, MO

63119;

c. National store no. 46 located at 10431 St. Charles, St. Ann, MO

63074;

d. National store no. 47 located at 13041 New Halls Ferry, Florissant,

MO 63033;

e. National store no. 62 located at 421 N. Kirkwood Road, Kirkwood, MO

63122;

f. National store no. 63 located at 7434 Olive Street Road, University

City, MO 63130;

g. National store no. 77 located at 4432 Lemay Ferry Road, Mehlville,

MO 63129;

h. National store no. 85 located at 14855 Clayton Road, Chesterfield,

MO 63011;

i. Schnucks store no. 103 located at 9719 Crestwood Road, Crestwood, MO

63126;

j. Schnucks store no. 124 located at 3661 Reavis Barracks, St. Louis,

MO 63125;

k. Schnucks store no. 130 located at 10223 Lewis & Clark,

Bellefontaine, MO 63136; and

l. Schnucks store no. 195 located at 6965 Parker Road, St. Louis, MO

63033.

3. The following supermarkets located in St. Charles County,

Missouri:

a. National store no. 22 located at 850 Jungerman, St. Peters, MO

63376; and [[Page 13990]]

b. Schnucks store no. 126 located at 1355 South 5th Street, St.

Charles, MO 63301.

4. The following supermarkets located in Jefferson County,

Missouri:

a. National store no. 65 located at 1200 Sugar Creek Square, Fenton, MO

63026; and

b. National store no. 70 located at 215 Arnold Cross Road, Arnold, MO

63010.

5. The following supermarkets located in Madison County, Illinois:

a. National store no. 35 located at 1716 Vandalia Road, Collinsville,

IL 62234; and

b. Schnucks store no. 175 located at 1435 Vaughn Road, Wood River, IL

62095.

6. The following supermarkets located in St. Clair County,

Illinois:

a. National store no. 64 located at 1290 Camp Jackson Road, Cahokia, IL

62206; and

b. National store no. 80 located at 4 Market Place, Fairview Heights,

IL 62208.

The assets to be divested shall include the supermarket business

operated, and all assets, leases, properties, business and goodwill,

tangible and intangible, utilized in the supermarket operations at the

locations listed above, but shall not include those assets consisting

of or pertaining to Schnucks or National trade names, trade dress,

trade marks, service marks, and such other intangible assets that

respondent also utilizes in its business at locations other than those

listed above.

B. Respondent shall divest the assets to be divested only to an

acquirer or acquirers that receive the prior approval of the Commission

and only in a manner that receives the prior approval of the

Commission. The purpose of the divestiture 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.

C. Pending divestiture of the assets to be divested, respondent

shall take such actions as are necessary to maintain the viability,

competitiveness, and marketability of the assets to be divested to

comply with Paragraphs II and III of this Order and to prevent the

destruction, removal, wasting, deterioration, or impairment of the

assets to be divested except in the ordinary course of business and

except for ordinary wear and tear.

D. Respondent 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.

III

It is further ordered that:

A. If respondent has not divested, absolutely and in good faith and

with the Commission's prior approval, the assets to be divested within

twelve months from the date this Order becomes final, the Commission

may appoint a trustee to divest any of the assets to be divested. In

the event that the Commission or the Attorney General brings an action

pursuant to section 5(1) of the Federal Trade Commission Act, 15 U.S.C.

45(1), or any other statute enforced by the Commission, respondent

shall consent to the appointment of a trustee in such action. Neither

the appointment of a trustee nor a decision not to be 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 Sec. 5(1) of the

Federal Trade Commission Act, or any other statute enforced by the

Commission, for any failure by the respondent 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, respondent shall consent to the

following terms and conditions regarding the trustee's powers, duties,

authority, and responsibilities:

1. The Commission shall select the trustee, subject to the consent

of respondent, which consent shall not be unreasonably withheld. The

trustee shall be a person with experience and expertise in acquisitions

and divestitures. If respondent has not opposed, in writing, including

the reasons for opposing, the selection of any proposed trustee within

ten (10) days after written notice by the staff of the Commission to

respondent of the identity of any proposed trustee, respondent shall be

deemed to have consented to the selection of the proposed trustee.

2. Subject to the prior approval of the Commission, the trustee

shall have the exclusive power and authority to divest the assets to be

divested.

3. Within ten (10) days after appointment of the trustee,

respondent shall execute a trust agreement that, subject to the prior

approval of the Commission and, in the case of a court-appointed

trustee, of the court, transfers to the trustee all rights and powers

necessary to permit the trustee to effect the divestitures required by

this Order.

4. The trustee shall have twelve (12) months from the date the

Commission or court approves the trust agreement described in Paragraph

III. B. 3. to accomplish the divestitures, which shall be subject to

the prior approval of the Commission. If, however, at the end of the

twelve-month period, the trustee has submitted a plan of divestiture or

believes that divestiture can be achieved within a reasonable time, the

divestiture can be achieved within a reasonable time, the divestiture

period may be extended by the Commission, or, in the case of a court-

appointed trustee, by the court; provided, however, the Commission may

extend this 12-month period only one (1) time for one (1) year.

5. The trustee shall have full and complete access to the

personnel, books, records, and facilities related to the assets to be

divested or to any other relevant information, as the trustee may

request. Respondent shall develop such financial or other information

as such trustee may reasonably request and shall cooperate with the

trustee. Respondent shall take no action to interfere with or impede

the trustee's accomplishment of the divestitures. Any delays in

divestiture caused by respondent shall extend the time for divestiture

under this Paragraph in an amount equal to the delay, as determined by

the Commission or, for a court-appointed trustee, by the court.

6. The trustee shall use his or her best efforts to negotiate the

most favorable price and terms available in each contract that is

submitted to the Commission, subject to respondent's absolute and

unconditional obligation to divest at no minimum price. The

divestitures shall be made in the manner and to the acquirer or

acquirers as set out in Paragraph II. of this Order; provided, however,

if the trustee receives bona fide offers for an asset to be divested

from more than one acquiring entity, and if the Commission determines

to approve more than one such acquiring entity, the trustee shall

divest such asset to the acquiring entity or entities selected by

respondent from among those approved by the Commission.

7. The trustee shall serve, without bond or other security, at the

cost and expense of respondent, on such reasonable and customary terms

and conditions as the Commission or a court may set. The trustee shall

have the authority to employ, at the cost and expense of respondent,

such consultants, accountants, attorneys, investment bankers, business

brokers, appraisers, and other representatives [[Page 13991]] and

assistants as are necessary to carry out the trustee's duties and

responsibilities. The trustee shall account for all monies derived from

the sale and all expenses incurred. After approval by the Commission

and, in the case of a court-appointed trustee, by the court, of the

account of the trustee, including fees for his or her services, all

remaining monies shall be paid at the direction of the respondent, and

the trustee's power shall be terminated. The trustee's compensation

shall be based at least in significant part on a commission arrangement

contingent on the trustee's divesting the assets to be divested to

satisfy Paragraph II of this Order.

8. Respondent shall indemnify the trustee and hold the trustee

harmless against any losses, claims, damages, liabilities, or expenses

arising out of, or in connection with, the performance of the trustee's

duties, including all reasonable fees of counsel and other expenses

incurred in connection with the preparation for, or defense of any

claim, whether or not resulting in any liability, except to the extent

that such liabilities, losses, damages, claims, or expenses result from

misfeasance, gross negligence, willful or wanton acts, or bad faith by

the trustee.

9. If the trustee ceases to act or fails to act diligently, a

substitute trustee shall be appointed in the same manner as provided in

Paragraph III.A. of this Order.

10. The Commission or, in the case of a court-appointed trustee,

the court, may on its own initiative or at the request of the trustee

issue such additional Orders or directions as may be necessary or

appropriate to accomplish the divestiture required by this Order.

11. The trustee shall have no obligation or authority to operate or

maintain the assets to be divested.

12. The trustee shall report in writing to respondent and the

Commission every sixty (60) days concerning the trustee's efforts to

accomplish divestiture.

IV

It is further ordered that, for a period of ten (10) years from the

date this Order becomes final, respondent shall not, without the prior

approval of 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 the St. Louis MSA.

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 the St. Louis MSA.

Provided, however, that these prohibitions shall not apply to the

construction of new facilities by respondent or the acquisition of or

leasing of a facility that has not operated as a supermarket within six

(6) months of respondent's offer to purchase or lease.

V

It is further ordered that, for a period of ten (10) years

commencing on the date this Order becomes final:

A. Respondent 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. Sec. 12(a)) acquiring any supermarket owned

or operated by respondent, any leasehold interest in any supermarket,

or any interest in any retail location used as a supermarket on or

after January 1, 1995 in the St. Louis MSA to operate a supermarket at

that site; provided however, that nothing in this Paragraph shall

prevent respondent from entering into or enforcing any agreement

requiring its approval of any sublease, assignment, or change in

occupancy, which approval shall not be unreasonably withheld; provided

further that use of a site for the operation of a supermarket shall not

be a basis for withholding such approval.

B. Respondent shall not remove any equipment from a supermarket

owned or operated by respondent in the St. Louis MSA 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 respondent in the ordinary course of business, or as part

of any negotiation for a sale, sublease, assignment, or change in

occupancy of such supermarket.

VI

It is further ordered that:

A. Within sixty (60) days after the date this Order becomes final

and every sixty (60) days thereafter until respondent has fully

complied with the provisions of Paragraphs II or III of this Order,

respondent shall submit to the Commission verified written reports

setting forth in detail the manner and from in which it intends to

comply, is complying, and has complied with Paragraphs II and III of

this Order. Respondent shall include in its 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 and III of the

Order, including a description of all substantive contacts or

negotiations for the divestiture and the identity of all parties

contacted. Respondent shall include in its 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,

respondent 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.

VII

It is further ordered that respondent shall notify the Commission

at least thirty (30) days prior to any proposed change in respondent

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 respondent that may affect compliance

obligations arising out of the Order.

VIII

It is further ordered that, for the purpose of determining or

securing compliance with this Order, respondent shall permit and duly

authorized representative of the Commission:

A. Upon five days' written notice to respondent, 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 respondent

relating to any matters contained in this Order; and

B. Upon five days' written notice to respondent and without

restraint or interference from it, to interview respondent or officers,

directors, or employees of respondent in the presence of counsel.

Asset Maintenance Agreement

This Asset Maintenance Agreement (``Agreement'') is by and between

Schnuck Markets, Inc. (``Schnucks''), a corporation organized under the

laws of the State of Missouri, with its principal offices located at

11420 Lackland Road, St. Louis, MO 63146-6928, and the Federal Trade

Commission (``Commission''), an independent agency of the United States

[[Page 13992]] Government, established under the Federal Trade

Commission Act of 1914, 15 U.S.C. 41, et seq. (collectively ``the

Parties'').

Premises

Whereas, Schnucks, pursuant to an agreement dated November 23,

1994, agreed to purchase certain assets of National Holdings, Inc. and

certain affiliates (hereinafter ``Acquisition''); and

Whereas, the Commission is now investigating the Acquisition to

determine if it would violate any of the statutes enforced by the

Commission; and

Whereas, if the Commission accepts the attached Agreement

Containing Consent Order, the Commission is required to place it on the

public record for a period of sixty (60) days for public comment and

may subsequently withdraw such acceptance pursuant to the provisions of

Sec. 2.34 of the Commission's Rules; and

Whereas, the Commission is concerned that if an agreement is not

reached preserving the status quo ante of the assets to be divested as

described in II.A. of the attached Agreement Containing Consent Order

(``Assets'') during the period prior to their divestitures, when those

Assets will be in the hands of Schnucks, that any divestiture resulting

from any administrative proceeding challenging the legality of the

Acquisition might not be possible, or might produce a less than

effective remedy; and

Whereas, the Commission is concerned that prior to divestiture to

the acquirer, it may be necessary to preserve the continued viability

and competitiveness of the Assets; and

Whereas, the purpose of this Agreement and of the Consent Order is

to preserve the Assets pending the divestiture to the acquirer approved

by the Federal Trade Commission under the terms of the Order, in order

to remedy any anticompetitive effects of the Acquisition; and

Whereas, Schnucks entering into this Agreement shall in no way be

construed as an admission by Schnucks that the Acquisition is illegal;

and

Whereas, Schnucks understands that no act or transaction

contemplated by this Agreement shall be deemed immune or exempt from

the provisions of the antitrust laws, or the Federal Trade Commission

Act by reason of anything contained in this Agreement;

Now, therefore, in consideration of the Commission's agreement

that, unless the Commission determines to reject the Consent Order, it

will not seek further relief from the parties with respect to the

Acquisition, except that the Commission may exercise any and all rights

to enforce this Agreement and the Consent Order annexed hereto and made

a part thereof, and, in the event the required divestiture is not

accomplished, to appoint a trustee to seek divestiture of the Assets,

the Parties agree as follows:

Terms of Agreement

1. Schnucks agrees to execute, and upon its issuance to be bound

by, the attached Consent Order. The Parties further agree that each

term defined in the attached Consent Order shall have the same meaning

in this Agreement.

2. Unless the Commission brings an action to seek to enjoin the

proposed Acquisition pursuant to Section 13(b) of the Federal Trade

Commission Act, 15 U.S.C. 53(b), and obtains a temporary restraining

order or preliminary injunction blocking the proposed Acquisition,

Schnucks will be free to close the Acquisition after 11:59 p.m., March

8, 1995.

3. Schnucks agrees that from the date this Agreement is accepted

until the earliest of the dates listed in subparagraphs 3.a-3.b it will

comply with the provisions of this Agreement:

a. Three business days after the Commission withdraws its

acceptance of the Consent Order pursuant to the provisions of Sec. 2.34

of the Commission's Rules; or

b. On the day the divestiture set out in the Consent Order has been

completed.

4. From the time Schnucks acquires the Assets until the divestiture

set out in the Consent Order has been completed, Schnucks shall

maintain the viability, competitiveness and marketability of the

Assets, and shall not cause the wasting or deterioration of the Assets,

nor shall it sell, transfer, encumber or otherwise impair their

marketability or viability.

5. Should the Commission seek in any proceeding to compel Schnucks

to divest itself of the Assets or to seek any other injunctive or

equitable relief, Schnucks shall not raise any objection based upon the

expiration of the applicable Hart-Scott-Rodino Antitrust Improvements

Act waiting period or the fact that the Commission has not sought to

enjoin the Acquisition. Schnucks also waives all rights to contest the

validity of this Agreement.

6. For the purpose of determining or securing compliance with this

Agreement, subject to any legally recognized privilege, and upon

written request with reasonable notice to Schnucks to its principal

offices, Schnucks will permit any duly authorized representative or

representatives of the Commission:

a. Access during the office hours of Schnucks, 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 Schnucks relating to compliance with

this Agreement; and

b. Upon five (5) days' notice to Schnucks and without restraint or

interference from them, to interview officers or employees of Schnucks,

who may have counsel present, regarding any such matters.

7. This Agreement shall not be binding until approved by the

Commission.

Analysis of Proposed Consent Order to Aid Public Comment

The Federal Trade Commission (``Commission'') has accepted for

public comment from Schnuck Markets, Inc. (``Schnucks'') an agreement

containing a proposed consent order. The agreement is designed to

remedy anticompetitive effects stemming from Schnucks' acquisition of a

number of supermarkets owned by National Holdings, Inc. and certain

affiliates (``National'').

The agreement has been placed on the public record for sixty (60)

days for receipt of comments by interested persons. Comments received

during this period will become part of the public record. After sixty

days, the Commission will again review the agreement and the comments

received and will decide whether it should withdraw from the agreement

or make final the agreement's proposed order.

The Commission's draft complaint charges that on or about November

23, 1994, Schnucks agreed to acquire supermarkets owned by National in

Missouri and Illinois. The Commission has reason to believe that the

acquisition, as well as the agreement to enter into the acquisition,

would substantially lessen competition in violation of Section 7 of the

Clayton Act, as amended, 15 U.S.C. 18, and Section 5 of the FTC Act, as

amended, 15 U.S.C. 45.

According to the draft complaint, Schnucks and National are direct

competitors for the retail sale of food and grocery items in

supermarkets, or narrower product markets contained therein, in the St.

Louis MSA, or narrower geographic markets contained therein. The St.

Louis MSA consists of the Missouri counties of Franklin, Jefferson,

Lincoln, St. Charles, St. Louis, Warren; the City of St. Louis; and the

Illinois counties of Clinton, Jersey, Madison, Monroe, and St. Clair.

[[Page 13993]] According to the draft complaint, these markets are

highly concentrated and entry is difficult or unlikely. Schnucks'

acquisition of National may reduce competition in these markets by

eliminating the direct competition between Schnucks and National, by

increasing the likelihood that Schnucks will become a dominant firm,

and by increasing the likelihood of collusive behavior among the

remaining competitors.

The agreement containing consent order attempts to remedy the

Commission's competitive concerns about the acquisition. Under the

terms of the proposed order, Schnucks must divest 24 supermarkets

within twelve months, to a purchaser approved by the Commission. If

Schnucks fails to satisfy the divestiture provisions, the Commission

may appoint a trustee to divest supermarkets to satisfy the terms of

the order. The 24 supermarkets to be divested are:

1. The following supermarkets located in the city of St. Louis,

Missouri:

a. National store No. 15 located at 2700 S. Grand Avenue, St. Louis, MO

63118;

b. National store No. 30 located at 5433 Southwest Avenue, St. Louis,

MO 63139;

c. National store No. 50 located at 8945 Riverview Drive, St. Louis, MO

63137; and

d. National store No. 60 located at 1605 S. Jefferson, St. Louis, MO

63104.

2. The following supermarkets located in St. Louis County,

Missouri:

a. National store No. 26 located at 8823 Ladue Road, Ladue MO 63124;

b. National store No. 45 located at 6 S. Old Orchard, Webster, MO

63119;

c. National store No. 46 located at 10431 St. Charles, St. Ann, MO

63074;

d. National store No. 47 located at 13041 New Halls Ferry, Florissant,

MO 63033;

e. National store No. 62 located at 421 N. Kirkwood Road, Kirkwood, MO

63122;

f. National store No. 63 located at 7434 Olive Street Road, University

City, MO 63130;

g. National store No. 77 located at 4432 Lemay Ferry Road, Mehlville,

MO 63129;

h. National store No. 85 located at 14855 Clayton Road, Chesterfield,

MO 63011;

i. Schnucks store No. 103 located at 9719 Crestwood Road, Crestwood, MO

63126;

j. Schnucks store No. 124 located at 3661 Reavis Barracks, St. Louis,

MO 63125;

k. Schnucks store No. 130 located at 10223 Lewis & Clark,

Bellefontaine, MO 63136; and

l. Schnucks store No. 195 located at 6965 Parker Road, St. Louis, MO

63033.

3. The following supermarkets located in St. Charles County,

Missouri:

a. National store No. 22 located at 850 Jungerman, St. Peters, MO

63376; and

b. Schnucks store No. 126 located at 1355 South 5th Street, St.

Charles, MO 63301.

4. The following supermarkets located in Jefferson County,

Missouri:

a. National store No. 65 located at 1200 Sugar Creek Square, Fenton, MO

63026; and

b. National store No. 70 located at 215 Arnold Cross Road, Arnold MO

63010.

5. The following supermarkets located in Madison County, Illinois:

a. National store No. 35 located at 1716 Vandalia Road, Collinsville,

IL 62234; and

b. Schnucks store No. 175 located at 1435 Vaughn Road, Wood River, IL

62095.

6. The following supermarkets located in St. Clair County,

Illinois:

a. National store No. 64 located at 1290 Camp Jackson Road, Cahokia, IL

62206; and

b. National store No. 80 located at 4 Market Place, Fairview Heights,

IL 62208

For a period of ten years from the date the order becomes final,

the order also prohibits Schnucks from acquiring, without prior

Commission approval, supermarket assets located in, or any interest

(such as stock) in any entity that owns or operates a supermarket

located in, the St. Louis MSA. This does not prevent Schnucks from

constructing new supermarket facilities on its own; nor does it prevent

Schnucks from leasing facilities not operated as supermarkets within

the previous six months.

For a period of ten years, if Schnucks sells or leases a

supermarket to another person, Schnucks may not enter into or enforce

any agreement that would restrict the ability of that person to operate

a supermarket. In addition, subject to certain exceptions, Schnucks may

not remove any equipment from a supermarket it owns or operates prior

to a sale, sublease, assignment, or change in occupancy.

The respondent is required to provide to the Commission a report of

compliance with the order within sixty (60) days following the date the

order becames final, every sixty (60) days thereafter until the

divestitures are completed, and annually for a period of ten years.

The purpose of this analysis is to invite public comment on the

proposed consent order to aid the Commission in its determination of

whether it should make final the proposed consent order contained in

the agreement.

This analysis is not intended to constitute an official

interpretation of the agreement and proposed consent order, nor is it

intended to modify the terms of the agreement and proposed consent

order in any way.

Donald S. Clark,

Secretary.

Concurring Statement of Commissioner Mary L. Azcuenaga

Re: Schnuck Markets, Inc., File No. 941-0131; Schwegmann Giant Super

Markets, Inc., File No. 941-0130

The two complaints allege geographic markets comprising ``the St.

Louis MSA, and narrower markets contained therein'' and ``metro New

Orleans, Louisiana area, which consists of the parishes of Orleans,

Jefferson, and St. Bernard, and narrower markets contained therein.''

Although I question the board geographic markets alleged, the

investigational record contains sufficient information to support a

finding of reason to believe with respect to small, discrete geographic

markets located within the broad regions alleged in the complaint, and

the stores to be divested were selected with a view to remedying

competitive concerns in the small, discrete markets.

In addition, the complaints allege as the product market ``the

retail sale of food and grocery products in supermarkets, and narrow

markets contained therein.'' A serious argument can be made that the

market should include sales of food and groceries in certain stores

other than traditional supermarkets. Since the investigational record

suggests that the concentration is high even if additional sales are

included in the market, the issue need not be resolved at this time.

Accordingly, I concur in the decision to accept the consent agreements

for publication.

[FR Doc. 95-6342 Filed 3-14-95; 8:45 am]

BILLING CODE 6750-01-M