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In an unusual attack on a consent decree, an assortment of legal, agricultural and retail groups have told the Federal Trade Commission that the antitrust deal permitting Wal-Mart Stores Inc. to acquire the Amigo supermarket chain is insufficient and violates agency policy. The groups, in separate letters filed in the past week, charge the FTC inadequately identified the markets in which Wal-Mart and Amigo compete, failed to provide significant details on the buyer of the four Amigo stores being divested and ignored other potential theories on why the $225 million deal is anticompetitive. Such omissions constitute a violation of the FTC rule requiring the agency to place on the public record an explanation of the relief obtained in a consent decree and other information that could help interested parties understand the order, the groups charged. Failure to provide this information also represents a departure from the commitment to transparency previously expressed by FTC Chairman Timothy J. Muris, they said. “We believe that neither the rule nor the transparency goal to which this commission has repeatedly said and often demonstrated it is committed has been satisfied in the Wal-Mart/Amigo analysis,” American Antitrust Institute president Albert Foer wrote. “We urge the commission to address the areas we have noted and to provide both the information necessary and the explanation of the commission’s reasoning so that interested parties can understand and evaluate the order.” An FTC spokesman said the agency is still reviewing the letters and had no immediate comment. A Wal-Mart spokesman in Puerto Rico did not return a call for comment. Wal-Mart agreed in February to acquire Amigo, the largest grocer in Puerto Rico. The FTC investigated the transaction for months, agreeing in November to drop antitrust objections after the company consented to the sale of four stores. Wal-Mart completed the transaction Dec. 5, though it has not integrated the companies because of ongoing litigation with Puerto Rico’s Department of Justice. The deal’s opponents are employing a seldom-used avenue in the antitrust laws which requires the FTC to issue an explanation of a consent decree before it becomes final. The public is permitted to comment and the agency is supposed to consider the feedback before finalizing an order. Most consent decrees attract little attention and it is rare for groups to coordinate an attack on a merger through this process. Yet the groups fighting the Wal-Mart-Amigo merger appear to see it as their last shot for stopping the deal. If successful, they could force the FTC to reopen its investigation into the merger. The National Grocers Association said the FTC did not disclose enough information about how it defined the market and why it required the sale of only four Amigo stores. The group said its market share calculations suggest problems in at least five other markets. It asked why the FTC did not explain its failure to seek divestitures in those other markets. A group of 15 Puerto Rican grocers said the divestiture would not remedy the anticompetitive harm because the acquirer — Maximo — is owned by a principal shareholder of Amigo. “His motives for purchasing the four Amigo stores are not to maintain the levels of competition existing before he sold his business to Wal-Mart,” the group said. “They are clearly to induce the FTC to approve the acquisition without further delay or investigation.” The coalition cited former FTC deputy economics director Gregory Vistnes as saying that he could not recall another instance in which the agency permitted the seller in a merger to buy divested stores. The Organization for Competitive Markets, a Lincoln, Neb.-based group representing farmers and ranchers, joined with the Puerto Rico Farm Bureau to complain that the FTC ignored other theories of anticompetitive harm, such as monopsony concerns. A monopsony occurs when a buyer becomes so powerful that it can extract below-market prices from suppliers. The two groups said Wal-Mart would enjoy monopsony power because it is combining its dominant grocery business with Puerto Rico’s largest supermarket chain. The result is the commonwealth’s farmers have fewer buyers for their products. This effect is exacerbated by Puerto Rico’s geography, which makes it more difficult to sell products to buyers not on the island. AAI asked the FTC why it did not address potential competition in the explanation of the consent decree. Under antitrust theory, a company may suppress prices even if it is not in the market because there is a potential for it to enter if prices rise. The antitrust institute said Wal-Mart as the largest discounter and Amigo as the island’s largest grocer are the two most natural potential competitors for every market where they do not currently compete head-to-head. “Logic suggests that the largest chain would be best positioned to go up against Wal-Mart and that this merger would meet the tests for the elimination of actual potential competition,” AAI wrote. “Yet none of this is discussed by the commission’s analysis.” The FTC will respond to each letter as part of its review of the consent decree. Those responses will be made public when the agency finalizes the decree, which is expected in the next few months. Copyright �2002 TDD, LLC. All rights reserved.

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