WASHINGTON -- The Food Marketing Institute here urged the Federal Trade Commission last week to re-evaluate its divestiture policies -- particularly rules that limit the ability of independents and small chains to buy divested stores.
Chris McAvoy, speaking on behalf of FMI, declared that independents "should not be treated as buyers of last resort." Speaking at an FTC-sponsored workshop on merger investigations and remedies, McAvoy said, "In supermarket mergers, as perhaps in no other industry, the commission has imposed a series of increasingly inflexible divestiture policies [that] put independents and small chains at a disadvantage, to their detriment and the detriment of consumers."
McAvoy, an attorney with Howrey Simon Arnold & White here, represents FMI.
Tim Hammonds, president and chief executive officer of FMI, said the FTC's policy requiring that divestitures of entire packages of stores be made to a single buyer "makes it almost impossible for smaller companies to purchase divested stores. Independents or small chains are often interested in buying a portion of such stores, but a single-buyer policy prevents them from doing so."
The FTC workshop here was one of a series the commission plans around the country to garner feedback on its merger policies. McAvoy spoke only briefly at the event but gave SN a copy of his more-detailed submission to the FTC.
In his formal paper, McAvoy stated, "[Although] the commission professes to be agnostic regarding divestiture buyers, neither favoring nor disfavoring independents and small chains," that policy is not carried through in practice. He then cited two specific policies that put smaller buyers at a disadvantage:
The FTC's preference against divesting stores to in-market firms, "[which] may prevent small firms that already have a presence in a market from expanding to provide increased competition for the merged firm."
The FTC's policy against allowing companies to divest mixed-store packages (that combine units operated by the company being acquired and the surviving company), "[which] may prevent small retailers from assembling divestiture packages that best suit their needs."