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They didn't. The FTC's job was to make sure the buyer had the infrastructure and finances to be able to run the stores.
Haggen presented a business plan that included an impressive and experienced supermarket-chain management team and an impressive amount of capital from deep pocketed investors. Unfortunately they weren't priced right for the market and sales immediate tumbled from their previous Albertsons/Safeway levels. I've seen no reports that they botched the rollout or had supply issues (like Target in Canada). I wouldn't be surprised if Alberstons did try to sabotage them - but will have to wait for specific claims to come out in court.
But here's the thing, they already had to close stores before the acquisition. People weren't willing to pay their high prices. When they took over the new stores, they raised prices over what Albertson's - already one of the most overpriced stores in the Pacific Northwest - was charging.
Yes, Albertsons has high regular prices but also has weekly sales & ads/flyers you can cherry-pick to make them competitive with Walmart.
"Trouble was, the company bit off more than they could chew. Soon after the newly acquired stores were up and running Haggen began cutting employee hours and laying off workers. Shoppers, union leaders and others said the company did virtually no advertising and that items were overpriced. Many of the stores were virtually devoid of business as a result and I know that to be true because I saw it first-hand."
"On Sept. 1 the company filed a $1 billion lawsuit against Albertsons, alleging that Albertsons undermined its expansion in five states. The lawsuit claims that Albertsons gave Haggen misleading and incomplete retail-pricing data, causing it to unknowingly inflate prices. And that was just one of the allegations.
Haggen’s unlikely empire was born out of Albertsons and Safeway’s need to ditch a big number of stores so the Federal Trade Commission would approve their $9.4 billion merger.
The FTC, which oversees antitrust regulation, gave its blessing to small but well-financed Haggen to take over most of the stores to keep competition alive. The deal, struck in December, closed in late January. The transition began the following month.
In an interview with The Seattle Times last month, Dan Ducore, FTC assistant director for compliance, said Haggen’s growth plan at the time “made a lot of sense” and that he hoped the initial troubles were a bump in the road.
The FTC declined to comment on Haggen’s bankruptcy filing.
The Haggen people evidently made some very bad decisions which Cerberus was under the gun to go along with, in order to get the federal gov't to go along with the transaction that Cerberus wanted.
The FTC guy said that it "made a lot of sense." He was obviously way off the mark. Maybe if he wants to be in the grocery business, he should get a job as a grocery exec. Then when he makes abysmal decisions, he will be shown the door.
The morons in the federal government should have no say in any such deal. These are the same clueless morons that have run up a $18 trillion debt...50% of that in the last 8 years. These clowns, who have (with a very few exceptions) never started or managed a successful private business in their lives, are the very last people anyone with a brain would listen to about business.
Federal Anti Trust Laws have been around for 125 years.
The Haggen people evidently made some very bad decisions which Cerberus was under the gun to go along with, in order to get the federal gov't to go along with the transaction that Cerberus wanted.
The FTC guy said that it "made a lot of sense." He was obviously way off the mark. Maybe if he wants to be in the grocery business, he should get a job as a grocery exec. Then when he makes abysmal decisions, he will be shown the door.
By the time I got out of college IBM was already being supplanted by upstart computer companies such as DEC, Bouroughs, CDC, Data General etc. IBM never had any monopoly power but DC lawyers and bureaucrats made thousands upon thousands scaring people into thinking so.
What's the likelihood Ceberus would have been able to avoid a similar outcome, had they been able to buy all stores?
If there were no FTC intervention Cerebus/Albertsons would be stuck in leases with identical stores across or just down the road from each other. This worked out well for them, they sold redundant stores, got cash to help offset the larger Safeway merger, got out of lease obligations, and had the bonus of Haggen being a poor competitor.
If there were no FTC intervention Cerebus/Albertsons would be stuck in leases with identical stores across or just down the road from each other. This worked out well for them, they sold redundant stores, got cash to help offset the larger Safeway merger, got out of lease obligations, and had the bonus of Haggen being a poor competitor.
Perhaps the intervention did benefit Cerberus in the ways that you mention. Although note that they did have to give up some profitable and successful Safeway stores in the deal, like the one where my friend's neighbor works (in Renton, WA).
But suppose for the sake of argument that Cerberus did come out ahead. Is in not kind of ironic that the federal gov't butts in to stifle a potential monopolists, but ends up giving the potential monopolist a big boost?
Perhaps the intervention did benefit Cerberus in the ways that you mention. Although note that they did have to give up some profitable and successful Safeway stores in the deal, like the one where my friend's neighbor works (in Renton, WA).
But suppose for the sake of argument that Cerberus did come out ahead. Is in not kind of ironic that the federal gov't butts in to stifle a potential monopolists, but ends up giving the potential monopolist a big boost?
It's not ironic in the least bit. Whenever the FedGov steps in in the name of "fairness" the result is anything but fair.
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