Tops would be required to sell seven Penn Traffic Supermarkets to an FTC-approved buyer within three months. That's according to a new settlement order being announced.
It also requires Tops to do everything in its power necessary to facilitate the sale and operation of the seven supermarkets in Bath, Cortland, Ithaca, Lockport and Sayre, PA.
The decision has left the union's president furious.
"We proved to the FTC and the Commissioners that Tops is not a threat to the consumer. In fact, Tops falls into the guidelines of protecting the consumer, and the fact is that prices have gone down as a result of Tops purchasing Penn Traffic stores," said Frank DeRiso, President of UFCW Local One. "The FTC is supposed to protect the consumer, but they have failed miserably here. The FTC's bad decision will hurt the consumer, and cost 450 UFCW members to lose their jobs and benefits like health care and pension. The FTC, and the Obama Administration should be ashamed of this decision. This is what happens when you let young, inexperienced FTC employees write the framework of a monumental decision that will adversely affect 450 working people's lives," DeRiso said.
The Federal Trade Commission (FTC) vote approving the complaint and proposed settlement order was 5-0. The order will be subject to public comment for 30 days, until September 7, 2010. After that, the Commission will decide whether to make it final.
Here's a portion of the FTC's news release, explaining its decision.
Through its investigation, the FTC staff found five local areas where competition was an issue: Bath, Cortland, Ithaca, and Lockport, New York; and Sayre, Pennsylvania. In these markets, absent a remedy, staff found that Tops' acquisition of Penn Traffic would be anticompetitive and likely would lead to higher grocery prices for consumers. In each market there are no more than three supermarkets within a 10- to 15-mile area. Consistent with past investigations, staff concluded that other chains such as Aldi's, buying clubs, and other food stores would not constrain prices after the merger was completed.
Further, in many of these geographic areas, staff found that new competitors were unlikely to enter the market quickly enough to prevent the acquisition's anticompetitive effects. And, in those markets where entry might occur in the future, staff found that despite the new competition, the markets would still be highly concentrated and the transaction, therefore, anticompetitive.
Click here to read the FTC's full decision.
