MACY-FEDERATED
KOPPELL DETAILS FOCUS OF STATE ANTITRUST PROBE

Byline: RICH WILNER

NEW YORK — A probe by the New York State attorney general into the Federated-Macy’s merger could put some new players into the New York City retail arena.
Attorney General G. Oliver Koppell said Monday his antitrust investigation into the merger agreed to last Thursday by Federated Department Stores and R.H. Macy & Co. is focusing on three areas: the impact on retail prices, repercussions on vendors and the affect on mall developers.
It was the first time Koppell disclosed the specific nature of the probe.
While Koppell’s investigation appears to pose no threat to the Federated-Macy’s merger, it can bring about an altered retail scene here.
The genesis of such a change is a 1988 antitrust investigation by the attorney
general into the attempt then by Macy’s to acquire Federated. At the time, Macy’s agreed that if the merger was effected, it would sell all of Federated’s 11 Abraham & Straus stores in New York State. One of those stores is in Brooklyn; one in Rego Park, Queens, and one in Manhattan, only a block south of the Macy’s Herald Square flagship.
A&S has 12 stores in the state.
In the 1988 deal, Macy’s agreed to sell the then-still-undeveloped A&S Plaza site in Manhattan to a competing department store chain and to run Bloomingdale’s as an independent operation until the A&S site was reopened by a competitor.
A similar finding by Koppell could introduce several new retailers to the New York scene. Dillard’s and May Department Stores have been mentioned most often.
On Monday, a Macy’s source said the 1988 agreement was a “preemptive measure” aimed at quickly settling a potentially disruptive probe. “We obviously have to face that agreement as an issue in the current probe.”
A spokesman for Koppell refused to discuss whether a similar deal was being considered in the Federated-Macy’s merger.
As for the areas Koppell said his investigation would cover, an increase in retail prices caused by fewer competing stores would be a major concern. In New York, the attorney general is the top consumer watchdog, and this is an election year for that post.
Koppell is also out to see how much of an impact a merger would have on vendors. It is feared that the deal could result in fewer vendors being needed by a merged organization. That could mean job losses on SA.
Mall development, too, has caught Koppell’s attention. Three major department store chains are available to anchor malls — Federated, Macy’s and Dillard’s — according to developers. If a merger is completed, some developers claim mall growth will be that much more difficult to achieve.
The FTC is also looking into the merger.
Koppell, who has already received thousands of pages of financial information from Federated and Macy’s, said he hopes to wrap up the probe “very shortly.” He would not be more specific on the time frame.
A tough stance on the merger could put him at loggerheads with Federated, which has maintained since January, when it launched its pursuit of Macy’s, that it didn’t anticipate any antitrust problems with a merger.
On Monday, a Federated spokeswoman said the chain, while “not unaware of the concerns of regulators,” believed it to be premature to speculate on any possible store closings.
“We are still working on a joint Federated-Macy’s operation plan and will deal with specifics, like store closings, if any, when the specifics of the operating plan are finished,” the spokeswoman said, adding that department store sales are a modest percentage of retail business here.
Federated stock, traded on the New York Stock Exchange, rose 3/4 to close at 20 3/8 Monday.
— Fairchild News Service

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