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The Great Atlantic & Pacific Tea Company’s proposed acquisition of Pathmark Stores, Inc.

Bates White, LLC successfully supported Axinn, Veltrop & Harkrider LLP in its representation of The Great Atlantic & Pacific Tea Company (A&P) before the Federal Trade Commission and various state attorneys general in connection with A&P’s $1.4 billion acquisition of Pathmark Stores, Inc. Under the terms of a consent order, the FTC ultimately allowed A&P to acquire Pathmark, provided it divest six of Pathmark’s 141 stores. Industry analysts had anticipated a much larger divestiture package of up to 30 stores.

The Bates White team, led by Dr. Halbert White, worked closely with attorneys at Axinn, Veltrop & Harkrider and executives at A&P to construct a rich data set and to analyze the effects of entry and exit of nearby competitors. Building on similar methods used to analyze mergers in Staples and Whole Foods, and using advanced econometric techniques, Bates White assessed how gross margins, prices, and dollar sales changed subsequent to entry and exit events within a local geographic area.

Bates White’s analysis demonstrated that Pathmark did not uniquely constrain A&P pricing, but that many other competitors constrain A&P pricing, including mass merchandisers and club stores.

According to Dr. White, who is also Professor of Economics at University of California, San Diego, “I am confident that the FTC’s decision was, in large part, a result of our analysis, which provided compelling quantitative evidence to back up the qualitative evidence presented to the FTC.” Michael Keeley of Axinn, Veltrop & Harkrider, a lead counsel for A&P in the transaction, observed that “Bates White’s role in this case was important to its successful outcome. The firm consistently provided sound, robust empirical merger and econometric analysis.”

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