If you live in Tucson you may have received grocery ads in the mail from a new grocery store, Haggen, starting this past May. At first, it was exciting to see a new grocery store option in Tucson, however doing a little research about the new Haggen stores opening in Tucson revealed a story of Federal Trade Commission (FTC) involvement through antitrust laws. If you are unfamiliar with antitrust laws, these laws are used by the Federal Trade Commission to review mergers among companies, and other situations regarding relations between private companies and their pricing policies.
With regards to specifics of the Haggen acquisition of Albertsons and Safeway stores, Haggen grew overnight from a Pacific Northwest grocery chain with 18 stores to 164 stores throughout the West and Southwest. Haggen acquired these additional stores through the FTC divestment process, which occurred due to the FTC’s ruling on the Albertsons-Safeway merger. It must be noted that the FTC forced Albertsons-Safeway to sell off certain stores as a condition of the FTC approving the Albertsons-Safeway merger, therefore, the sale of these stores was not a result of market forces. As can be expected from government interference in the market, the actual consequences have been anything but the stated intention of antitrust laws, which is to increase competition. The consequences have been ruinous not only for the now bankrupt Haggen, which was unprepared for overnight growth into new markets, but also for consumers and grocery store workers. As evidence of the undesired results of antitrust, I present this article from the Arizona Daily Star.
As evidenced in the Daily Star article, the forced sale of stores to Haggen did not provide value or increased competition to consumers since Haggen was not in tune with the Tucson grocery market and advertised products with noncompetitive prices. In the end, the Haggen stores are closing and will possibly be taken back over by Alberstons! The workers at the Haggen stores have been thrown into a sea of uncertainty which not only affects their present employment, but their retirement benefits.
I want to highlight the last couple paragraphs of the Daily Star article :
That’s the crazy thing about these corporate mega-mergers. They’re made by CEOs, financiers, private equity men and regulators viewing the situation from 40,000 feet, but they affect so many people right here on the ground.
“Even if we do get to go back to Safeway, I want to know what caused all this stress and sleepless nights. I bet I’ve aged 10 years,” Wanda Pollard-Phillips said. “I really want to know what went on here. Who’s to blame?”
The question “Who’s to blame?” is a valid one and the answer really lies in the article, but it isn’t directly stated, nor does the article intend to analyze who is the blame. The interference of non-market regulators in the marketplace is to blame for allowing inefficient and unknowledgeable businesses to put themselves into a ruinous situation. At least the regulators are mentioned as being part of the problem in the second to last paragraph, but Unfortunately, no real analysis is given as to whether the FTC and antitrust laws should exist in the first place. Sadly, the tone is such that the companies are solely to blame. Let us seriously consider the call to abolish antitrust laws.
For more discussion of antitrust, I suggest reading this Mises Daily article and if that isn’t enough more are located here. Also, you can read a book such as Dominick T. Armentano’s Antitrust and Monopoly: Anatomy of a Policy Failure.
Below is a summary timeline of the Haggen takeover of Albertsons and Safeway stores in 2015:
- January 27th, the FTC approved the divestment of Safeway and Albertsons stores with the Albertsons-Safeway merger finalized January 30th, as reported by The Oregonian
- At the beginning of May, announcements are made about new Haggen stores opening in Tucson by the end of May
- May 28th, 3 soon to be Haggen stores are closed and set to reopen on May 30th, as discussed in this Tucson Sentinel article.
- By the end of July, news is out that Haggen is struggling after taking over 146 additional stores.
- In August, the closing of 2 of 3 Tucson stores is reported
- At the beginning of September, Haggen announces it has filed for bankruptcy and subsequently by the end of September, all Arizona stores are to be closed
- In November, Haggen receives approval from Bankruptcy Court that it can sell some of its stores to outside companies, including Albertsons.
- December starts with news of more Haggen auctioning off its core stores.