Discount retail giants Dollar Tree And Family Dollar have reached a settlement with the Federal Trade Commission (FTC) to proceed with Dollar Tree’s acquisition of Family Dollar, initially valued at $9.2 billion. To address antitrust concerns, the agreement mandates the sale of 330 Family Dollar stores to Sycamore Partners, a private equity firm. This decision aims to preserve competition in local markets across 35 states where both retailers currently operate, ensuring consumers continue to benefit from competitive pricing and convenient access to discount general merchandise.
The FTC’s investigation and subsequent complaint highlighted the potential anticompetitive effects of the merger. Both Dollar Tree and Family Dollar are key players in the discount retail sector, offering a wide array of products including food, home goods, apparel, and seasonal items, typically priced below $10. Dollar Tree, known for its fixed $1 price point, and Family Dollar directly compete on price, product selection, store locations, and customer service. The FTC pinpointed 330 specific locations where the merger, without intervention, would likely eliminate direct competition, leading to reduced choices and potentially higher prices for consumers in those areas.
Debbie Feinstein, Director of the FTC’s Bureau of Competition, emphasized the importance of dollar stores in providing value and convenience to consumers. “Dollar stores offer convenience and value by providing a broad assortment of general merchandise at discounted prices in stores close to where consumers live or work,” Feinstein stated. “This settlement will ensure that consumers will continue to benefit from competition among their local dollar stores.” The core concern of the FTC was that the acquisition, as initially proposed, would substantially lessen competition. By removing a direct competitor, Dollar Tree could potentially exert unilateral market power, negatively impacting consumers through reduced choices and potentially unfavorable pricing.
To remedy these competitive concerns, the FTC’s settlement demands a significant divestiture. Dollar Tree and Family Dollar are required to sell off 330 Family Dollar stores to Sycamore Partners within 150 days of the acquisition’s completion. To guarantee the stores remain viable and competitive until the divestiture, an Order to Maintain Assets is included in the settlement, ensuring Family Dollar continues to operate these locations effectively. Furthermore, a monitor has been appointed to oversee Dollar Tree and Family Dollar’s adherence to the settlement terms. Detailed information regarding the divestiture, including a list of affected cities, is available in the FTC’s analysis, which was released for public comment.
The FTC Commission voted 4-1 to issue the complaint and accept the proposed consent order for public comment. Commissioner Joshua D. Wright dissented, and both the Commission and Commissioner Wright released public statements providing further context and explanation of their positions. The proposed consent agreement package was published in the Federal Register, initiating a 30-day public comment period, concluding on August 3, 2015. Following the public comment period, the Commission would then decide whether to finalize the proposed consent order.
It’s important to note that an FTC administrative complaint is issued when the Commission has “reason to believe” a law violation has occurred or is occurring and deems a proceeding to be in the public interest. A consent order, once finalized, carries legal weight for future actions, with potential civil penalties of up to $16,000 per day for each violation.
The FTC’s Bureau of Competition, in collaboration with the Bureau of Economics, is responsible for investigating potential anticompetitive business practices. The public can report concerns or learn more about this work by contacting the Bureau of Competition directly. The FTC also encourages public engagement through social media platforms like Facebook and Twitter and offers press release subscriptions for ongoing news and updates. This settlement underscores the FTC’s commitment to maintaining competitive markets and protecting consumers from potential harms arising from mergers and acquisitions, particularly in sectors like discount retail that are crucial for budget-conscious shoppers.
