FEDERATED SAYS AG RUSHED TO JUDGMENT ON MACY MERGER CASE

Byline: Rich Wilner

NEW YORK--Federated Department Stores is steamed.
It says New York State Attorney General G. Oliver Koppell's decision to oppose its upcoming merger with R.H. Macy & Co. was made much too precipitously.
Federated claims Koppell's insistence that it sell off all 12 Macy's units in New York--including the Herald Square flagship store--came after only one meeting with the retailer's executives.
Koppell told a crowded press
conference last Tuesday that the merger was "totally unacceptable" due to antitrust violations.
Federated says it shipped Koppell more than 25 cartons of financial documents in late June. At that time, Federated said, there was a brief meeting between several of its executives and Koppell and some of his assistants, but nothing substantive was discussed.
It was agreed at that introductory session, says Federated, that subsequent meetings would be held. Only one such meeting ever took place, on Aug. 16. Prior to and after that date, Federated says, it called Koppell's office to request additional meetings but was told none were needed.
Carol Sanger, a Federated spokeswoman, contrasted Koppell's procedure with the Federal Trade Commission's. The FTC, said Sanger, conducted a six-month investigation that included at least eight face-to-face meetings with Federated executives. Two days prior to Koppell's press conference, the FTC said it had no antitrust objections to a Federated-Macy merger.
Recalling the Aug. 16 meeting between Federated and Koppell--one week before Koppell went public with his position--Sanger said, "We had the feeling that the entire antitrust negotiating process was just starting."
She described that meeting as "cordial and constructive," a typical first get-together in a negotiating process.
"Federated had as many as eight face-to-face meetings with the Federal Trade Commission, which took six months to investigate its national anti-trust concerns," Sanger added.
Sanger said Federated had grown frustrated with Koppell's office since turning over massive amounts of materials to his office in late June.
"We kept asking Koppell's staff if they wanted to set up a meeting, but they kept putting us off," Sanger noted.
On Monday evening, after an announcement that there would be a press conference by Koppell on the following day, Sanger said, Federated unsuccessfully attempted to find out what the attorney general planned to say.
"No one we spoke to on Koppell's staff knew anything about the press conference," said Sanger. She said Federated also called Gov. Mario Cuomo's office seeking information and was told no one there knew anything of the press conference, either.
Richard Barr, a spokesman for Koppell, said Friday he didn't remember Koppell's staff rejecting Federated's attempts at a meeting and said the attorney general's staff remains "available to Federated."
"We want to hear from them on this important issue and await some concrete response to our objections," Barr said.
At last Tuesday's press conference at his lower Manhattan offices, Koppell said he had "informal discussions" with Macy's and Federated about his antitrust concerns. He also pointed out that over the last several months, he has received "extraordinary communications" from the retail industry on how the merger might damage the retail landscape.
Koppell claimed that the merger, which would create a $13.5 billion department store operation, was "totally unacceptable" because it would result in a "virtual monopoly in the department store market" in New York.
Many observers questioned whether or not first-termer Koppell, who is up for reelection and faces a tough primary test on Sept. 13, allowed politics to play a role in his decision in the Federated-Macy case. Koppell rejected that notion at his press conference, and Barr answered similar questions Friday.
"To not act would be to not be doing his job," Barr said. "We didn't choose the year or the time of year that Federated decided to merge with Macy."
Barr said Koppell and the FTC could legitimately come to different findings when looking into potential antitrust problems.
"If you're looking at something nationwide and then look at the same issue in one state, or even one part of one state, you can come to a different conclusion," Barr said. "The problem is much more concentrated here."
Barr said any insinuation that Koppell was acting in a political manner was wrong, claiming an actual lawsuit would have drawn more of the spotlight.
"We didn't announce a lawsuit this week," he said.
If Federated and Koppell cannot come to an agreement that will satisfy the attorney general that no antitrust violations are occurring, Koppell will be obliged to file an antitrust suit against Federated. If that happens, the case goes to court and a judge renders a decision.
Both Federated and Koppell's office said Friday that the two sides continue to be in frequent telephone contact.
Federated added, however, that further telephone conversations had already been scheduled even at the time Koppell made his unexpected announcement last Tuesday and demanded a response from Federated by Aug. 30.
Following the press conference, Federated said it was "surprised and disappointed."
Both sides said they hope to settle the matter soon.
On Wednesday, Federated is expected to file the Macy disclosure statement, which will include the merger agreement, but little detail on the merger process. That is expected to come later, most likely in mid-September, in an amended disclosure statement.
--Fairchild News Service

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