[T]wo Family Dollar retail stores in Vermont will be sold under an agreement that authorizes the proposed merger of Family Dollar with former rival Dollar Tree.
Family Dollar stores in Morrisville and Newport will be sold to Sycamore Partners, which will operate them as Dollar Express stores. The sale is required to ensure competition in those markets, Assistant Attorney General Jill Abrams said.
The July 2 settlement of a lawsuit by 17 states, including Vermont, requires that 330 stores nationwide be sold to Sycamore Partners in order for the merger to take place.
The lawsuit contended that the merger would violate section 7 of the Clayton Antitrust Act. Section 7 bans the acquisitions of “assets” when such an acquisition will decrease competition or tend to create a monopoly, a term that is used as a shorthand for a firm with strong and significant market power, and has the long term ability to increase price and/or exclude competitors, according to the Federal Trade Commission’s website. Courts typically look for firms that own 50 percent of sales of a particular product or service within a specific geographical area, according to the website.
Though the merger will bring the total of the combined Dollar Tree and Family Dollar branded stores in Vermont to 25, just short of rival Dollar General’s 26 stores, the issue is maintaining competition between stores in a specific region, Abrams said.
“It’s having two companies that are merging and no other competitor,” Abrams said.
For instance, when there is a Family Dollar, a Dollar Tree and a Dollar General all near each other, there would be no reason for the merged companies to divest a store, she said.
Dollar General and Dollar Tree competed with one another for the acquisition of Family Dollar before, during and after the July 28, 2014, announcement that Family Dollar and Dollar Tree would merge, but Dollar Tree’s slightly lower offer won out in the end, according to a Sept. 25 news release from Dollar Tree.
This was because Dollar Tree, which had only about 5,000 stores at the time, would have to divest fewer stores to acquire Family Dollar than Dollar General would have, as the industry leader at the time, according to the release.
The Sycamore Partners’ ongoing transaction of acquiring the 330 stores from Dollar Tree is not expected to close for several months. The Sycamore Partners firm has declined to comment until the transaction is complete.
“Dollar Express” was acquired by Dollar Tree in 2000, according to Dollar Tree’s website. Sycamore Partners will acquire that brand in the transaction with Dollar Tree, which is why they will be reopening the 330 stores under the name of “Dollar Express.”
With the merger, Dollar Tree, Inc., will operate more than 13,000 stores in 48 states and five Canadian provinces and its sales will exceed $19 billion annually, according to the company’s July 6 news release.
