FTC-engineered grocery deal fastest failure in 'modern grocery store history.' (salaries, Obama)
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About a year ago, the large West coast grocery store chain Safeway was sold to a private equity company called Cerberus. All well and good, we had a willing seller and willing buyer. Safeway stockholders at the time overwhelmingly approved the deal: Safeway Gains Shareholder Approval For Cerberus Deal | Food World | Food Trade News
But the federal gov't felt the need to horn in, and insisted that approx. 150 of the stores involved be sold off to a company called Haggen, in order to ensure that no hint of monopoly power would be created. The result was a mess.
Quote:
“This is the fastest (failure) in modern supermarket history,” said grocery strategist Burt P. Flickinger. “In all of retail, I haven’t seen anything like this.”
A friend of mine told me about his neighbor who had worked at a Safeway store for 30 years. The store was converted to 'Haggen' per fed request. It had been one of the biggest and highest volume stores on the West Coast, but after conversion, sales dropped by 60%. She wanted to transfer to another Safeway store, but was not allowed that option. She's up the creek w/o a paddle, while the federal regulators who created this mess go tra-la-la on their way with zero accountability.
The very idea of monopoly in the grocery industry is just dumb in the era of Walmart, Costco, Amazon, etc.
About a year ago, the large West coast grocery store chain Safeway was sold to a private equity company called Cerberus. All well and good, we had a willing seller and willing buyer. Safeway stockholders at the time overwhelmingly approved the deal: Safeway Gains Shareholder Approval For Cerberus Deal | Food World | Food Trade News
But the federal gov't felt the need to horn in, and insisted that approx. 150 of the stores involved be sold off to a company called Haggen, in order to ensure that no hint of monopoly power would be created. The result was a mess.
A friend of mine told me about his neighbor who had worked at a Safeway store for 30 years. The store was converted to 'Haggen' per fed request. It had been one of the biggest and highest volume stores on the West Coast, but after conversion, sales dropped by 60%. She wanted to transfer to another Safeway store, but was not allowed that option. She's up the creek w/o a paddle, while the federal regulators who created this mess go tra-la-la on their way with zero accountability.
The very idea of monopoly in the grocery industry is just dumb in the era of Walmart, Costco, Amazon, etc.
But the federal gov't felt the need to horn in, and insisted that approx. 150 of the stores involved be sold off to a company called Haggen, in order to ensure that no hint of monopoly power would be created. The result was a mess..
In most of these cases the merger would have resulted in 2 Albertsons or Vons across the road from each other. Haggen didn't have to take the stores but made a capitalistic decision that they could quickly grow their 18 store operation in another region to 180+ stores in a new market -and do well despite being more upscale than the old locations and more upscale than the surrounding Albertsons & Vons. They made a bad capitalistic corporate decision - not the gov'ts fault.
In most of these cases the merger would have resulted in 2 Albertsons or Vons across the road from each other. Haggen didn't have to take the stores but made a capitalistic decision that they could quickly grow their 18 store operation in another region to 180+ stores in a new market -and do well despite being more upscale than the old locations and more upscale than the surrounding Albertsons & Vons. They made a bad capitalistic corporate decision - not the gov'ts fault.
There were clearly two parties in this decision. One was Haggen, as you point out. But the other was the federal gov't, which forced the sale upon Cerberus. Clearly without the intervention of the feds, the deal would have not happened the way it did.
But thanks for proving my point: the federal regulators that helped to create this mess will walk away from it with ZERO accountability.
About a year ago, the large West coast grocery store chain Safeway was sold to a private equity company called Cerberus.
I believe these were the same financial vampires who sucked all the blood from Chrysler, got rich, then dumped the carcass onto the taxpayers which Obama promptly bailed out.
Gotta protect the financial vampires at all costs.
But the federal gov't felt the need to horn in, and insisted that approx. 150 of the stores involved be sold off to a company called Haggen, in order to ensure that no hint of monopoly power would be created.
The FTC did not insist on Haggen. The sell-off was triggered by anti-trust law, but any interested buyer could have stepped up.
You can blame Haggen for trying to jump from 18 to 170+ stores in a matter of months. And there is a lot of evidence that Albertson's failed to live up to their contractual obligations during the transfer - the courts will sort that out, they're suing each other.
The point is that there is no grocery monopoly possible unless perhaps gov't decided to impose one. There was no need for DC bureaucrats to horn into this deal. We would all have been better off if this agency never existed, and the money to pay their salaries was back in our pockets.
The FTC did not insist on Haggen. The sell-off was triggered by anti-trust law, but any interested buyer could have stepped up.
You can blame Haggen for trying to jump from 18 to 170+ stores in a matter of months. And there is a lot of evidence that Albertson's failed to live up to their contractual obligations during the transfer - the courts will sort that out, they're suing each other.
True the FTC did not force Haggen into the deal. However they did force Safeway/Albertsons/Cerberus. That is the point, which one after another left-leaner seems to miss.
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