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Bitter end to Pathmark deal
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December 16, 1999: 7:58 p.m. ET
Ahold blames FTC for failure of deal, Pathmark blames Ahold
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NEW YORK (CNNfn) - All sides in Royal Ahold N.V.’s failed acquisition of the Pathmark supermarket chain put their fingers-of-blame to work Thursday over the $1.7 billion deal that never made it to the checkout counter.
The Netherlands-based Ahold said the Federal Trade Commission changed the rules in mid-game. The FTC said Ahold’s plan would have given it a virtual monopoly in Pathmark’s territory.
And, Pathmark, which has 130 stores in the Northeast region of the U.S., claimed Ahold is in breach of their merger agreement and promised to hold the Dutch retail giant accountable for balking.
Ahold (AHO), which owns the Stop & Shop, BI-LO, Tops and Giant-Landover chains said that due to the FTC’s strong opposition to the deal to acquire the Carteret, NJ-based Pathmark chain, the Dutch company was swinging its shopping cart toward the exit doors.
"It’s a pity we had to take this decision,” said Hans Gobes, Ahold’s senior vice president of communications. "It has taken nine months of negotiations and the FTC and state attorneys general have changed their policies.”
Gobes said Ahold was willing to divest a number of stores, but government officials would not budge.
Ahold is the world’s sixth-largest supermarket chain in terms of sales with more than 3,600 supermarkets and specialty stores in 17 countries. More than 1,000 stores are located in the United States and Gobes said U.S sales top the $20 billion mark.
Abrupt action
James Fishkin, the FTC’s lead attorney on the Pathmark deal, said the government was following established guidelines in its negotiations with Ahold.
"The degree of overlap (of stores) was quite high compared to other deals,” Fishkin said.
Fishkin said giving one company such a large market gives consumers fewer choices and could lead to high prices and reduced services.
Pathmark is also feeling short-changed. Jim Donald, chairman, president and chief executive officer of Pathmark and SMG-II Holdings, which owns Pathmark, blasted Ahold in a statement, claiming the Dutch giant breached the merger agreement.
"It is clear that Ahold has not used its best efforts to get this deal closed as they are contractually obligated to do,” Donald said. "We are very disappointed that Royal Ahold has taken this abrupt action. We intend to hold Ahold responsible for the consequences of its actions.”
Donald also said the company would continue to "pursue all our alternatives to enhance the value of Pathmark to its shareholders, customers and other constituencies.”
Gobes said Ahold made every effort to complete the acquisition and maintained the company was not in breach of the agreement. He also said Ahold will continue to seek to grow in the United States.
"We definitely will continue to grow,” he said. "Strategically, nothing changes.” 
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