Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: Supermarket chains get FTC approval to waive restriction on employee transfers, (Sep 28, 2015)

By Jeffrey May, J.D.

The FTC has approved a plan that would allow Albertson's supermarkets to rehire former employees who were working in stores that the agency recently ordered divested to Haggen Holdings LLC, now that Haggen is closing the stores. An FTC consent order calling for the divestiture of 146 Albertson's and Safeway stores located in Arizona, California, Nevada, Oregon, and Washington to Haggen was intended to preserve competition in these markets lost by the $9.2 billion merger of Albertson’s and Safeway. As part of the deal, Albertson's was restricted from soliciting or hiring employees who transferred to a new Haggen location for 12 months. In light of Haggen's pending bankruptcy and store closings, the FTC agreed to waive the restriction on employee transfers in a September 24 letter. The restriction was not part of the consent order; however, expedited agency approval of a waiver of the no-hire agreement would avoid Albertson’s running the risk of being accused of violating terms of its divestiture agreement with Haggen or the Commission’s order.

When the Albertson's and Safeway supermarket chains announced plans to divest stores to secure FTC clearance of their planned merger last December, Haggen—based in Bellingham, Washington—operated just 18 stores in Washington and Oregon. Haggen experienced difficulties following the rapid expansion of the chain. In August, the company announced plans to close or sell stores in Arizona, California, Nevada, Oregon, and Washington, most of which it had acquired under the divestiture order. Earlier this month, Haggen filed a lawsuit against Albertson's, alleging that the supermarket giant destroyed or substantially diminished the economic viability, marketability, and competitiveness of the grocery stores it sold as part of the FTC divesture order. A week later, Haggen filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

Attorneys: Paul T. Denis (Dechert LLP) for Albertson's LLC.

Companies: Haggen Holdings LLC; Albertson’s LLC

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