- The Washington Times - Saturday, October 5, 2002

Small grocers are being shut out of the bidding process for grocery stores that companies sell to meet merger rules, a new government report said.

The Federal Trade Commission, by streamlining its policy on store sales after 1997, has made it more difficult for small and independent grocers to buy them, the General Accounting Office said in a report released late last week. The antitrust agency began capping the number of potential buyers for divested stores to make sales in a more efficient and timely manner.

The FTC also required more buyers to have the money up front to pay for more than one store, instead of in increments, the report said.

The GAO, Congress' investigative arm, is urging the FTC to review the policy and the effects it is having on small business, said Paul Jones, who is with the GAO.

"Just from the numbers alone, we have seen a decline in the amount of small businesses participating in buying these divested stores," said the director of tax and justice issues. "We feel the FTC needs to look into this matter because they have not done any research on the impact of such approaches since the early '90s."

The commission will conduct a study on its policies made final since 1994, FTC Secretary Donald Clark said in a letter with the report.

Johnny Johnson said FTC policies hurt his planned expansion in 2000 when the chairman and founder of Community Pride grocery stores in Richmond tried to buy 10 stores from Hannaford Bros. Co.

Mr. Johnson said Hannaford and the FTC sent contradicting information about the stores Hannaford sold as part of a deal to merge with Food Lion.

"First, I would hear that I wasn't large enough, even though I had the revenue for it, and then they turned around and said I hadn't sent the paperwork in for the bid and they sold the stores to Kroger," he said.

Caren Epstein, Hannaford spokeswoman, said the supermarket chain wanted to follow the FTC's preference for single buyers.

"You don't cross the FTC when you want a merger to be approved," Ms. Epstein said.

In the 10 orders for grocery companies to sell 285 stores since 1997, the FTC used a single buyer 76 percent of the times that more than one store was sold.

Robert Santoni, owner and president of Santoni's Super Market in Baltimore, said the pressure from the FTC and larger corporations made him think twice about buying consolidated grocery stores to expand his one-store business.

"I turned it down because nowadays chain stores are about $2 million a piece and you're fighting a diluted market to keep that store going," Mr. Santoni said.

In the letter, Mr. Clark said the altered policies helped the commission sell stores quicker with less risk of depreciating. Mitch Catz, FTC spokesman, said the agency would not comment further.

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