Comments on the Food Marketing Institutes’ Submission to the FTC Titled “Supermarket Merger Investigations and Remedies”

On June 18, 2002 the Federal Trade Commission held a workshop on merger investigations and remedies. The Food Marketing Institute prepared a substantial white paper for that workshop. Christopher MacAvoy, an attorney at Howrey, Simon, Arnold, and White, forwarded the report to the FTC; however the report identifies no authors. In this paper we analyze and discuss the FMI positions. The intent is to provide additional insights on the two underlying issues, i.e. the scope and content of the questions asked by the FTC in its second request when investigating a merger or acquisition, and the Commissions’ policies and procedures for ordering divestitures as a condition for approving supermarket mergers. Our additional insights include a tabulation and analysis of divestitures completed in supermarket retailing since 1995. With a few exceptions, the FMI comments are substantive and specific points. One needs to recognize that FMI does not speak for all firms that wholesale and retail food products, and they do not speak for consumers, the primary target group that the antitrust laws are designed to protect. Hence a careful review of their points and additional perspective on the underlying issues may contribute to the Commission’s review of its practices. The following section of this paper analyzes and discusses FMI comments on the FTC Second Request questions for supermarkets. The third section comments on the FMI critique of FTC divestiture practices and analyzes actual divestitures since 1995 in supermarket retailing.