NEW YORK — A federal judge has blocked acquisition by The May Department Stores Co. of four McCurdy & Co. stores, ruling Wednesday that the deal “will have serious adverse economic effects” on the Rochester, N.Y., market.

Judge David Larimer, of U.S. District Court, Rochester, said May Co.’s plan to purchase a principal competitor of its Kaufmann’s division would slash competition and prevent other department stores from entering the area.

“Whenever competition is substantially reduced, consumers suffer,” Judge Larimer ruled. – Fairchild News Service

“Lack of choices and higher prices are almost inevitable. In such a circumstance, the public interest controls, and the acquisition must be vacated and annulled,” he noted.

May Co., however, is ready to appeal, according to Shepard Goldfein, a lawyer with Skadden, Arps, Slate, Meagher & Flom. He said his firm was retained Wednesday to handle the appeal.

“We’re disappointed with the judge’s decision, which, we believe, ignores the competitive realities in the marketplace,” said a May Co. spokesman. “May Co. is reviewing the opinion and evaluating [its] options.” In October, Judge Larimer froze the deal, and a four-day hearing was held last month.

Judge Larimer’s decision was hailed by State Attorney General G. Oliver Koppell, who had filed suit to block the purchase on grounds that it would create a near-monopoly for May Co. in the Rochester market.

“This is a victory for consumers and competition,” Koppell said in a statement.

“I hope [May Co.] will accept the careful and well-reasoned decision by Judge Larimer and act promptly to allow department store competition to return to Rochester,” he added.

Antitrust disputes are rarely settled in courtrooms; most often, they are negotiated and never become lawsuits. Koppell, for example, threatened to file suit to stop Federated Department Store’s merger with R.H. Macy & Co., but an agreement was reached forcing Federated to sell off six downstate stores in the next two years.

Six years earlier, then-Attorney General Robert Abrams threatened a similar lawsuit during his antitrust investigation of Macy’s proposed takeover of Federated, but he inked a deal with Macy’s under which the chain would sell 11 Abraham & Straus stores if the acquisition went through.

Koppell urged May Co. to reopen the McCurdy sites, which are closed and being converted into Kaufmann’s locations.

The units are located in the Irondequoit, Marketplace, Greece Ridge Center and Eastview malls, which already house Kaufmann’s stores. According to real estate sources, May Co.’s plan was to turn two of the four former McCurdy’s into Kaufmann’s units merchandised differently from the existing ones.

The third McCurdy’s at Greece Ridge Center would become a Kaufmann’s, but the current Kaufmann’s would be converted to Lord & Taylor, also operated by May Co.

The fourth site at Eastview mall would be turned over to the mall owner, Wilmorite Co.

– Fairchild News Service


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