May-Associated Deal in the Clear : FTC Took No Action
Now that May Co. California and J. W. Robinson are officially part of the same company, it appears that the big department store merger has survived possible legal challenges based on its effect on competition in Southern California and elsewhere.
The Federal Trade Commission, the agency responsible for dealing with possible antitrust concerns, heard testimony for several weeks about the merger’s effect on competition in some markets but took no action to block the combination.
“We believe that the FTC is not going to take any action,” May Department Stores Chairman David C. Farrell told reporters late last week in St. Louis before shareholders approved the merger with Associated Dry Goods, which owned J. W. Robinson.
“Our intention is to run May and Robinson’s independently,” he said. “They are positioned differently. Each company has to define more clearly where they’re positioned.”
He noted that the company had complied with all FTC requests for information and that the 20-day waiting period for government antitrust action under the Hart-Scott-Rodino Act expired Sept. 28 without the FTC making any announcements.
Susan Ticknor, a spokeswoman for the FTC in Washington, said the commission retains the right to challenge a merger after it is effective. However, she acknowledged that it is rare for the commission to request changes once a merger has gone through.
So far, the most noticeable effects of the merger are taking place on the corporate level in New York, Farrell said. The Fifth Avenue office of Associated Dry Goods, parent of Robinson’s, is being closed, while May’s offices on Sixth Avenue are being expanded.
Plans for Layoffs
Regarding layoffs, May President Thomas A. Hays indicated last week that “less than 0.5% of the combined companies will be trimmed.” Of Associated’s 65,000 employees, he said, “under 500” will be affected. May employs 72,500.
Closer to home, Burbank officials say they’re continuing to look into legal remedies in the wake of May’s decision several weeks ago to cancel a Robinson’s slated for the Burbank Towncenter mall. Officials have contended that May was stifling competition by getting out of the Burbank commitment so that it could install a Robinson’s in Laurel Plaza in North Hollywood, where May’s store houses the California division’s headquarters.
“Obviously, it would have been better for us if the FTC had filed a preliminary injunction prior to the shareholders meeting,” said City Manager Bud Ovrom. “Inaction by the FTC is tantamount to approval. (But) I am sure May Co. and Associated have not heard the last of us.”
Burbank Mayor Mary Kelsey said Hahn Co., the mall’s developer, is still hunting for another department store to take Robinson’s place and expects news regarding a replacement by early November.
In the last few weeks, analysts have said they expect May to make some big changes once the merger dust has settled.
Interestingly, more than one retailing observer has speculated that May might be inclined to sell one of the Southern California divisions, and not necessarily Robinson’s, an upscale Associated division that has shown losses recently. The retailing community has said for months that May Co. California is suffering from a “confused image.” As one executive at a rival department store said: “Is the chain competing with K mart or the Broadway?”
However, Farrell said the unit “is performing well. Profits are moving up nicely, (and) we’re very pleased with the California operations.”
Times staff writer Greg Braxton contributed to this story.
