Md. senators weigh in on sale of Giant stores Mikulski, Sarbanes express concern for area in letter to FTC

July 16, 1998|By James M. Coram | James M. Coram,SUN STAFF

U.S. Sens. Barbara A. Mikulski and Paul S. Sarbanes have entered the fray over whether the Federal Trade Commission should require Giant Food Inc. to sell stores in Eldersburg, Westminster and Frederick as part of an antitrust agreement.

"Giant's consumers and employees are rightly concerned that any divestiture requirements could cause a seismic shift in their local communities," the Maryland Democrats said in a letter to FTC Chairman Robert Pitofsky yesterday.

The commission is reviewing the proposed $2.7 billion cash sale of Giant Food Inc. of Landover to Royal Ahold NV, a Netherlands grocer that owns several U.S. supermarket chains, including Martin's Food Markets.

The Martin's in Eldersburg and Westminster are about a half-mile from the Giant supermarkets in those communities -- too close, perhaps, to satisfy the FTC, which must approve the purchase.

The commission's role is to look at the "anti-competitive effects" such a large sale might have and protect consumers by ensuring that prices don't increase and quality doesn't decline, said Victoria A. Streitfeld, FTC public affairs director.

But Mikulski and Sarbanes are not sure divestiture is the best way to protect customers.

"What parameters will the FTC establish to ensure that the decisions about which of Royal Ahold's combined holdings will be sold are made in the best interest of the communities and are not a pretext for breaking existing labor contracts?" the senators asked Pitofsky.

The specter of attempted union busting was raised Tuesday at a rally outside the Eldersburg Giant.

Buddy Mays, president of United Food & Commercial Workers Local 27, which represents 6,300 Giant employees -- 800 of whom work in Carroll and Frederick counties -- accused Royal Ahold of targeting the Carroll and Frederick Giants for divestiture "secretly and behind closed doors."

Many Giant workers are union employees, but employees at Royal Ahold supermarkets are not, Mays said.

Although Mikulski and Sarbanes acknowledged in their letter that "the FTC cannot appropriately comment on the content of a pending review," they nonetheless urged Pitofsky to make sure his review includes "an assessment of the impact that divestiture might have on local communities and affected employees" at Giant.

"Giant has been a welcome neighbor, known for both their community- and consumer-friendly practices and for union wage-scale jobs," the senators wrote.

They asked the FTC chairman to consider whether other grocery stores nearby and the planned expansions of other chains into the area would be "sufficient competition to alleviate the need for divestiture."

They also asked if an exemption to divestiture might be possible "if a comparable buyer cannot be found who will both maintain the integrity of service and honor union contracts."

Finally, they asked: "What steps will be required to ensure that every single affected store will remain open with a new buyer, since the closure of any store would directly reduce competition and service in the affected area?"

The FTC's answers to their questions "will have a potential impact on thousands of Marylanders who are customers or employees of Giant," the senators said. "We urge you to move promptly and thoughtfully to achieve an outcome that is in the best interests of the communities and companies involved."

Republican Rep. Roscoe G. Bartlett, who had written Pitofsky on July 9 to express his concerns about Giant consumers and employees, issued a news release yesterday saying he believes "it's premature for anyone to speculate that any particular stores will need to be sold."

Pub Date: 7/16/98

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