AAI Warns FTC of Dangers in Supermarket Mergers, Urges Careful Scrutiny of Ahold Acquisition in Northeast.
In a letter to Federal Trade Commission Chairman Robert Pitofsky, the American Antitrust Institute today warned that recent mergers in the supermarket industry raise the likelihood that the U.S. industry is following a dangerous consolidation path. According to the AAI, “A substantial literature suggests that as supermarket concentration moves toward higher levels, price tends to follow.”
The AAI observed that to date, the Commission has taken a permissive posture with regard to supermarket mergers, generally allowing supermarket mergers to occur, subject only to partial divestiture of some stores where competitive overlaps are clear. Most recently, it approved the merger of Kroger and Fred Meyer, combining over 2,000 stores, with only 8 stores to be divested. “We believe,” says the AAI, “that a dangerous line may have been crossed and a new, more aggressive antitrust analysis must be developed to protect the American consumer against the price increases that rather clearly lay ahead if the consolidation trend is permitted to continue.”
Focusing on the pending acquisition of Pathmark (132 stores in the New York City area) by Royal Ahold (over 1,000 stores in the U.S.), the AAI pointed out that there are substantial horizontal overlaps between Ahold’s current operations and Pathmark’s. These are so pervasive as to make it unlikely that partial divestitures will keep the merger from substantially reducing competition. This is especially true since previous partial divestitures in earlier Ahold acquistions appear not to have maintained competitive markets.
Looking beyond specific local markets, the AAI called attention to the likelihood that permitting further growth of the mega-chains by merger will cripple the independent sector of grocery retailing, which in turn will likely result in higher prices for consumers. When mega-chains become power buyers able to squeeze the profits out of manufacturers, manufacturers can only stay in business if they charge more to their other customers, thereby reducing the ability of smaller chains to compete with the mega-chains. Without such competition, the mega-chains will have little motivation to pass their savings along to consumers. The AAI calls this “a vicious cycle,” with consumers and farmers the ultimate losers. It urges the FTC to be highly skeptical of the merging parties’ claims that there are merger-specific efficiencies that will be passed on to consumers.
If the concerns raised in its letter are confirmed by the FTC’s investigation, the AAI concludes that the FTC should seek an injunction of the merger, rather than allow it to go forward subject to a partial divestiture of stores.
The AAI is a non-profit education organization dedicated to the vigorous use of antitrust as a vital component of national competition policy. Its complete ten-page letter is available on its website, www.antitrustinstitute.org.
June 18, 1999
Robert Pitofsky, Chairman
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, DC 20580
Re: Mergers in the Food Industry; Ahold/Pathmark
Dear Chairman Pitofsky:
The American Antitrust Institute takes this opportunity to express certain concerns about increasing concentration in the retail sector of the domestic grocery industry. As you know, the AAI is a non-profit education organization dedicated to the vigorous use of antitrust as a vital component of national competition policy.1
The various markets that bring food to the table of the American consumer are undergoing extraordinary structural changes at an extraordinarily rapid pace. Because of the long-run competitive potential of strong regional chains in the food retailing industry and the apparent failure of partial divestiture as a remedy in certain mergers that eliminate these firms, we urge the Federal Trade Commission to refocus its concerns. Here we look at the pending acquisition of Supermarkets General Holdings Corporation (“Pathmark”) by Ahold Acquisition Inc. (“Ahold”), calling your attention to broader implications that should lead the Commission in appropriate cases to challenge outright rather than to restructure an industry-concentrating merger.
I. The Rapidly Concentrating U.S. Supermarket Industry
A series of recent mergers in the supermarket industry (e.g., Safeway and Dominick’s, Albertson’s and American Stores (pending), Kroger and Fred Meyer, and Ahold and Giant Food) has raised the likelihood that the U.S. industry is following the consolidation path that has already occurred in England and other European countries. The four largest chains in England (Tesco, Sainsbury, Safeway and ASDA) now are reported to do nearly 50% of all grocery sales, compared to less than 30% ten years ago.2 While these chains have enjoyed “massive growth” in profits in the past decade, they are reported to charge higher prices than their counterparts in Western Europe.3 This is not surprising, in that a substantial literature suggests that as supermarket concentration moves toward higher levels, price tends to follow.4 The link between national concentration and pricing practices has not been adequately explored. The FTC should not assume there is no linkage.
It is estimated that the Safeway, Albertson’s, Kroger, Ahold and Wal-Mart now control about 33 percent of grocery sales in the U.S.5 Only seven years ago, in 1992, the five leading chains controlled just 19 percent of U.S. grocery sales.6 The concentration of many regional markets is often higher than the national level.7 Various industry observers have predicted that -absent rigorous antitrust enforcement-we will see the near-term emergence of four or five chains with over 60 percent of all supermarket sales in the U.S.8
To date, the Commission has taken a permissive posture with regard to these mergers. In its May 27, 1999, press release announcing its approval of a merger between Kroger (1,300 stores) and Fred Meyer (800 stores), the Commission required only 8 stores to be divested. No supermarket chain has previously held the greater than 10 percent national market share that Kroger now has been allowed. We believe that a dangerous line may have been crossed and a new, more aggressive antitrust analysis must be developed to protect the American consumer against the price increases that rather clearly lay ahead if the consolidation trend is permitted to continue.
In the balance of this letter we discuss the Ahold transaction (Parts II and III) and the implications of increasing concentration at the national level (Part IV).
II. The Ahold/Pathmark Merger
According to industry reports, Ahold operates more than 3,600 stores globally, with 1998 sales of over $30 billion. Its US companies operate over 1,000 stores that generated 1998 sales of $16.2 billion9 with operating results of $714 million. It employs approximately 130,000 people in the U.S.
Ahold, which has a 28% market share in its home nation of the Netherlands, began operations in the U.S. in 1977 by acquiring the BI-LO chain in the southeast. In 1981 it acquired a 29-store chain in Pennsylvania. In 1988 it acquired the Edwards and Finast chains in Ohio, southern New York, and southern New England. In 1991 it acquired Tops, a leading chain in Buffalo, Rochester, and other central and western New York cities. In 1996, Ahold acquired Stop & Shop, a leading firm in several southern New England markets. In 1998, it acquired the Giant Food Stores in Washington, DC, and Baltimore.
The current pending acquisition of Pathmark would cement Ahold’s leadership position and significantly accelerate its rapid progress towards dominance of the East Coast from the Carolinas to Boston, by adding the metropolitan New York City area.
Pathmark operates 132 stores with 1998 sales totaling $3.7 billion. Its stores are located on Long Island, in New York City, Westchester/Rockland, northern New Jersey, southern New Jersey, eastern Pennsylvania, and northern Delaware.
(c) Horizontal Overlaps
There is a substantial horizontal overlap between Ahold’s current operations and Pathmark’s. It appears that the supermarkets are competitors in 18 counties. Forty-five of Edwards 67 stores have a Pathmark store as a direct competitor (i.e. located within three miles of each other). In addition, 9 Edwards sites or stores under construction will compete with Pathmark. Two Stop & Shops, 6 Giant (Carlisle, Pa.) and 1 Super G (Landover, Md.) supermarkets also are in direct geographic competition with a Pathmark store. In addition, future sites of 1 Stop & Shop and 1 Giant will compete with Pathmark.
III. The Antitrust Challenge
Given the horizontal overlaps, it will no doubt be necessary to take some type of enforcement action. Approval conditioned on divestiture of stores in local markets where the stores of Ahold and Pathmark compete head to head (partial divestiture), is what an outsider might predict, based on the Commission’s handling of the Kroger/Fred Meyer merger and Ahold’s previous acquisitions of Stop & Shop and Giant Food Stores. Partial divestiture may not be an adequate remedy in the current merger. The massive level of divestiture needed to make the remedy effective would be nearly equivalent to challenging the merger.
(a) The Overlaps Are Pervasive, Amounting to a Regional Consolidation
The pervasive pattern of overlaps throughout the geographic market renders this a very different picture from the one presented by Kroger/Fred Meyer, in which the remedied overlaps were generally located in fringe areas. Sixty-two of 67 Edwards’ stores are located in counties where Pathmark operates. Here, virtually any given Ahold-owned supermarket in the geographic market could be targeted as a direct competitor by an expanding Pathmark, and vice versa.
Entry, even by established supermarket chains, into new markets is not easy. To become a factor in a market (e.g., 5% share) is even more difficult for an outside chain. But in the case of Ahold and Pathmark, each firm already has distribution facilities, trained supervisory personnel, and a substantial marketing presence in the region. Thus, potential competition will be eliminated from those parts of the region in which the two companies are not presently going head-to-head. The pending merger is not one of extension into a new geographic market by a firm that had not previously been a major factor. Rather, it is a merger of local and regional consolidation.
(b) This Merger May Deprive the Market of an Aggressive Merchant
We understand that Ahold has stated its post-acquisition intention of changing its Edwards stores to Pathmark stores. We understand that Edwards has operated with an Every Day Low Price (EDLP) format; Pathmark with a “high-low” marketing format. It is believed by some observers that the EDLP format in the supermarket industry delivers products, on average, at a lower gross margin, which should translate into lower prices for the consumer in a competitive environment. We urge the Commission to determine if this is true.
If it is true, the merger apparently will eliminate from the New York metropolitan area a particularly aggressive merchant (i.e., Edwards operating in the EDLP format), whose transformation into a “high-low” retailer will leave the market with noticeably less price competition.10
(c) Ahold’s History Suggests That Partial Divestiture May Not Be an Adequate Remedy
Under Section 7 of the Clayton Act, a merger that affects 100 local markets but has a negative effect in only one, is illegal and can in theory be enjoined. Obviously, the merging parties could go back to the drawing board, voluntarily eliminate the problematic market from the deal, and then try again. To avoid this apparent wastefulness, the antitrust agencies generally work with the merging parties to eliminate the problematic market via a settlement order and then approve the merger. However, this strategy can work only if there is assurance that the problematic market is “cured” and it is in fact cured. To be effective, a partial divestiture should result in no less competition than would have existed had the merger not occurred.11
Because Ahold has a track record in mergers, the Commission can go back and evaluate whether Ahold’s divestitures that were conditions of previous mergers were in fact effective. We have reviewed materials prepared by the Food Marketing Policy Center that examine the effects of the 1996 Stop & Shop and 1998 Super G divestitures. They indicate that the divested stores experienced fairly dramatic reductions in sales after the divestitures, e.g. performing in Connecticut at over 25% below the stores that were not divested. A likely implication is that these stores are less competitive today than they were before the mergers and that, as a result, the divestitures were not an adequate remedy for mergers that would otherwise have been illegal.12
We urge the Commission to determine whether this is true, and if so, further to determine whether the causes are such that they can be satisfactorily addressed in any conditions imposed upon the Ahold/Pathmark merger, in order to assure that competition will not be reduced.13
IV. Further Concentration of Grocery Retailing Threatens Consumer Welfare
The supermarket industry is one among many that are in the midst of a headlong rush toward concentration. In such industries, it is incumbent, within the “incipiency” nature of Section 7 of the Clayton Act, that the Commission do more than react to the narrow question of whether prices will rise in the near term within a specific local market. Because Section 7 talks about mergers that “may” lessen competition, prediction in broader markets and for longer periods of time is unavoidable.
At this point in time, a partial divestiture remedy would ignore a real problem that needs to be addressed, namely that permitting the further growth of mega-chains in the grocery industry likely assures the crippling of the independent sector, which in turn will likely result in higher prices for consumers.
What we are calling the mega-chains – the five largest retail grocery sellers – exercise enormous buying power, which they employ against the food producers and manufacturers. The sheer size of the mega-chains looms as a lever – the manufacturers must get their products onto the shelves of the largest retailers, even if they have to pay higher, even exorbitant, slotting and other allowances and make other costly concessions– which they are forced to do. As a result, manufacturers may raise their prices to all customers in order to earn an acceptable return on investment. In that case, all other customers subsidize the mega-chains. Even if prices are not raised across the board, smaller customers are always at a competitive disadvantage, because they are not receiving the higher allowances and other concessions, which effectively raises their cost of goods. Ultimately, consumers foot the bill and receive nothing of value for the higher prices.
Much of this conduct is probably illegal under the Robinson-Patman Act. The power buyer problem largely results from national concentration.14 A meaningful Robinson-Patman enforcement program would not permit the mega-chains to pressure suppliers into granting them discriminatory benefits in prices, allowances, special product or package availability or other terms and conditions. It would prevent the power buyers, who build their power through mergers, from exercising that power.15 We urge the Commission to do more than make an occasional speech that pays lip service to the Robinson-Patman Act, by bringing appropriate cases. At the same time, given the difficulties of proof in Robinson-Patman cases and constrained Commission resources, it is necessary also to limit the power buyer problem through vigorous merger enforcement.16
What we have described is a vicious cycle. The larger we allow the mega-chains to grow, the more clout they have with the manufacturers. The more clout they exercise, the greater their ability to gain market share by weakening and eliminating their smaller competitors. As the smaller competitors disappear, there becomes less reason to compete on the basis of price, service, selection or any other dimension. Consumers and farmers are the ultimate losers, but channel profitability also may suffer due to pricing inefficiency.
It is important to note that this cycle, as explained above, is not the result of efficiencies that accrue when a manufacturer deals with a very large retailer. The federal merger guidelines carefully sort through general claims of efficiency when considering whether they more than offset any increase in market power thereby making a merger or acquisition consumer friendly.17
Robert Tobin, President and CEO, Royal Ahold USA, claims the proposed acquisition and the previous acquisitions of Stop & Shop and Giant, Landover, Md., generate substantial efficiencies that benefit consumers. He states:
The acquisition of Pathmark provides Ahold with a large number of high quality locations in an attractive market where our position left room for improvement. This is now going to change. . . . We have various positive contributions in mind and expect considerable synergies from the integration with our sister operations. We have already gained quite a lot of experience in generating synergies following our other successful acquisitions. We have shown this recently after the fourth quarter 1998 acquisition of Giant-Landover and earlier in 1996 with Ahold’s acquisition of Stop & Shop. In particular, the exchange of best practices, the restructuring of the Pathmark balance sheet and the integration of certain administrative functions will positively impact on cost and benefit the bottom line significantly. We also see important advantages for local Pathmark customers as we offer them the upgrading of their favorite stores and the continuity of shopping in a well-stocked supermarket where they can count on quality service.18
James Donald, CEO of Pathmark, likewise advances this position declaring:
We are excited about the opportunity to benefit from Ahold’s economies of scale and synergy benefits to step up our services in the local communities and improve the company’s results.
It appears that Royal Ahold intends to carry efficiency gains to the bottom line (profits), not the top line (increased sales via lower prices). Moreover, these efficiency claims need to be carefully documented within the context of the merger guidelines. Are they merger specific? They are not. The exchange or transfer of “best practices” can be done without acquiring a firm. Trade associations, trade shows, and consultants routinely showcase best practices for all to adopt. The restructuring of Pathmark’s balance sheet is a pecuniary economy that generates no real gain for society, and represents a financial change that can be accomplished by other means. Only the “integration of certain administrative functions” seems to be merger specific, but this advantage would occur if a different chain with no horizontal overlap acquired Pathmark. More important, the claim of significant administrative savings is very questionable. A Morgan Stanley Dean Witter analyst writes:
We expect that there will be minimal overhead savings as Edwards, part of AHOLD’s Giant of Carlisle division, operates with only a small administrative office.19
Information Clearinghouse, when discussing the Royal Ahold/Giant merger, cites efficiencies in private label procurement as justification for the merger.
Ahold is . . . placing greater emphasis on its growing private label program. This is one area where the Company believes it can gain large efficiencies through common buying programs.20
Again, one must question whether this increase in buying power, a pecuniary economy,21 is merger specific, and whether it will benefit consumers or the bottom line. Private label programs, of course, can be quite effective without mergers.
At this juncture, the antitrust agencies can and should be highly skeptical of alleged efficiencies when offered as a justification for mergers in food retailing.
Conclusion: The Commission will have to draw a line in the sand for the merger-driven consolidation of the retail grocery industry. If the concerns we have raised are supported by the staff’s investigation, the Commission should oppose the Ahold acquisition of Pathmark, not by conditioning it on partial divestitures, but by seeking an injunction against the entire merger.
Albert A. Foer, President
The American Antitrust Institute
William J. Baer, Director
Bureau of Competition
Jeremy Bulow, Director
Bureau of Economics
1 The AAI is described at www.antitrustinstitute.org. It is supported by donations from a variety of foundations, law firms, corporations, trade associations, and individuals. Certain donors may have an interest in opposing the acquisition discussed herein.
2 Gene Hoffman, “Sounding a Warning: The Consolidation of the Supermarket Industry in England Poses Vital Questions for U.S. Grocery Retailers,” Progressive Grocer 104 (March, 1999).
3 Id. Hoffman, former president of Kroger, also summarizes a London Times survey showing prices at a U.S. chain to be 40% lower than at an English Tesco store.
4 Marion, Heinforth and Bailey, for example, conducted a study in which they concluded, “[O]ur results find a positive linkage between concentration and prices even after holding costs and quality/service constant. The results of this study are consistent with six other studies that found a significant positive relationship between grocery store prices and the concentration of sales in local markets.” “Strategic Groups, Competition and Retail Food Prices,” in Ronald Cotterill (ed.), Competitive Strategy Analysis in the Food System (Boulder, CO, 1993) at 197. The same results are reported using updated information in Marion, “Competition in Grocery Retailing: The Impact of a New Strategic Group on BLS Price Increases,” 13 Review of Industrial Organization, 381,398 (1998). Also see Cotterill, “Measuring Market Power in the Demsetz Quality Critique in the Retail Food Industry,” 15 Agribusiness 101 (1999); Cotterill, Dhar and Putsis, “On the Competitive Interaction Between Private Label and Branded Grocery Products,” (forthcoming, Journal of Business, 1999); Lamm, “Prices and Concentration in the Food Retailing Industry,” 30 Journal of Industrial Economics 67 (1981); Geithman, Marvel and Weiss, “Concentration, Prices and Critical Concentration Ratios,”63 Rev. of Economics and Statistics 346 (1981); Hall, Schmitz and Cothern, “Beef Wholesale-Retail Marketing Margins,” 46 Economica 295 (1979); Marion, Mueller, Cotterill, Geithman & Smelzer, “Price and Profit Performance of Leading Food Chains,” 61 American Journal of Agricultural Economics 420 (1979); Cotterill, “Market Power in the Retail Food Industry: Evidence from Vermont,” Review of Economics and Statistics 379 (Aug. 1986).
5 Robert Goch, “Merger and Acquisition Activity in the US Supermarket Industry 1991-1998,” Special Report, Information Clearinghouse, Inc. (Great Neck, NY, December 21, 1998); Ronald W. Cotterill, “Policy Editorial: Food Industry Concentration: The Uncharted Global Venue,” 6 Food Marketing Policy Center Newsletter (April 1999).
6 Goch, op. cit.
7 E.g., the four-firm concentration is over 66% in Boston-Worcester-Lawrence; 90% in Buffalo-Niagara Falls; 68% in Cleveland-Akron; and 73% in Hartford. Information ClearingHouse, Inc., Customer & Market Insights, June 19, 1998 report on Royal Ahold, N.V.
8 Cotterill, op. cit. Note 5 supra; also see R. Matthews,” Consolidation: Out of Our Hands,” 65 Grocery Headquarters 21 (1999); Arthur Anderson Inc., “SuperShakeout,” 5 Senn-Delaney’s Food for Thought (February, 1999); R. Goch, op. cit.
9 It appears that this figure only incorporates the fourth quarter sales of Giant Food (Md.). If that is the case, then the industry concentration levels are somewhat higher than we suggested.
10 Clearly, Edwards is entitled to change formats without a merger. But there is a question of whether doing so in the absence of the acquisition of its major higher-priced competitor would make business sense for Ahold. By using an EDLP format Ahold presumably undersells Pathmark and has a higher market share than it would otherwise have.
11 Articles by FTC staff reflect the Commission’s awareness of the importance of this point. See Jonathan B. Baker, “‘Continuous’ Regulatory Reform at the Federal Trade Commission,” 49 Administrative Law Review 859, 872 (1997) and George S. Cary and Marian R. Bruno, “Merger Remedies,” 49 Administrative Law Review 875,881 (1997).
12 We recognize that there can be many explanations in retrospect for why certain divested stores perform comparatively poorly. It should be a presumption, subject to rebuttal, that such divested stores would have performed at the same general level as non-divested stores, had divestiture not occurred.
13 We are not advocating a divestiture remedy. However, if it is true that the previous mergers were followed by a reduction of competition, the Commission should approach any proposed ameliorating divestitures in the Ahold/Pathmark merger with elevated skepticism. We urge that the following guidelines should apply:
(1) The Commission should oversee and promote an open solicitation for purchase of divested properties.
(2) The Commission should have final say on sales of divested stores and should make an affirmative finding that the purchasing company (or companies) is managerially and financially strong enough to operate the divested stores at no less than the competitive level they had held as a part of either Ahold or Pathmark
(3) A divested store should not be acquired by a company that will increase a dominant position locally or be in a position to share market leadership in a tight oligopoly.
(4) The burden should be on the merging parties to come forward with appropriate acquirers and specific justification that each of the divested stores will continue to be no less competitive than in the recent past. To the extent that the Commission is not convinced, it should discount future sales of divested stores and demand that (if feasible) additional divestitures be made in the same markets.
(5) If satisfactory, specific divestiture agreements are not in place, the merger should not be permitted to be consummated.
(6) Beyond this, a settlement order should include a right of revisitation by the Commission after a period of time, say eighteen months, to determine whether aggressive strategic conduct of the Company has been responsible for the inability of a divested store to maintain market share, and to order such relief as may be appropriate. The order should contain an agreed-upon process for evaluating the effectiveness of the divestitures (including agreement by the acquiring companies to provide relevant information).
14 As we write, it is being reported that SuperValu Inc., the nation’s largest food wholesaler, has agreed to purchase rival Richfood Holdings “in a move that further advances the rapid-fire consolidation underway in the supermarket industry.” “SuperValu to Buy Richfood for $882 Million,” Wall Street Journal, June 10, 1999; also see “Supervalu to Buy Richfood,” Washington Post, June 10, 1999, noting that Richfood “has been hurt by consolidation in the grocery retailing industry, which has left it with fewer supermarket chains as customers. In April Richfood announced that it had lost a key supply contract with Pennsylvania’s Giant Food Stores Inc., a unit of Royal Ahold.” It is worth adding that by cutting off Richfood as a supplier, and thereby removing approximately 20% of its customer base, Ahold undercut Richfood’s ability to service its other customers, which may reflect a further way in which Ahold can utilize its merger-enlarged clout to raise rivals’ costs.
15 See Mark Maremont and Robert Berner, “Leaning on Suppliers, Rite Aid Deducts Cash at Bill-Paying Time,” Wall Street Journal, March 31, 1999: “Manufacturers complain that unilateral deductions from bills have grown in recent years, as the drugstore industry has consolidated into a few large chains with enormous buying clout. Mostly, retailers’ demands are up front. It is common for them to insist that suppliers foot part or all of various costs, such as advertising and the ‘reset’ of store displays, and provide deep discounts and even batches of free merchandise at times. The demands have become particularly vociferous after acquisitions, when retailers face high conversion costs and expect suppliers to share the burden…”
16 A second impact may be an increase in double marginalization in the food system due to stronger successive monopoly positions in the food channel. This produces even higher consumer prices, lower output and lower farm level prices than a single stage monopoly. This level of price inefficiency even results in lower total profits for manufacturers and retailers than the single stage monopoly. Vertical integration, the standard solution to double marginalization, is not feasible given the diversity of food manufacturers and retailers. See Cotterill, “The Economics of Private Label Pricing and Channel Coordination,” in Galizzi and Venturini (Eds.), Vertical Relationships and Coordination in the Food System (1999) 39, at 42 et seq.
17 E.g, “Efficiencies generated through merger can enhance the merged firm’s ability and incentive to compete, which may result in lower prices, improved quality, enhanced service or new products.
The Agency will consider only those efficiencies likely to be accomplished with the proposed merger and unlikely to be accomplished in the absence of . . .the proposed merger. . .These are termed merger specific efficiencies.
. . .[T]he merging firms must substantiate efficiency claims so that the Agency can verify by reasonable means the likelihood and magnitude of each asserted efficiency, how and when each would be achieved (and any costs of doing so), how each would enhance the merged firm’s ability and incentive to compete, and why each would be merger-specific.
The Agency will not challenge a merger if. . .cognizable efficiencies likely would be sufficient to reverse the merger’s potential to harm consumers in the relevant market, e.g., by preventing price increases in the market.”
18 Royal Ahold press release, April, 1999.
19 Levin, D., M. Aggarwal, A. Fowler, J. Pritchard, (1999) “Ahold (AHO); Purchase of Pathmark a Positive; Upgrade to Strong Buy” Morgan Stanley Dean Witter, New York, March 11.
20 Information Clearing House, Inc., “Royal Ahold, N.V., F&D Reports, Customer & Market Insights,” Great Neck, NY 11023, dated June 19, 1998.
21 When a power buyer squeezes its supplier, it merely reallocates profit margin from supplier to retailer. This is not efficiency-creating.There should be no assumption that the retailer’s saving will be shared with consumers.