Review of Industrial Organization 18: 351–362, 2001.
© 2001 Kluwer Academic Publishers. Printed in the Netherlands.
Did May Company’s Acquisition of Associated Dry
Goods Corporation Reduce Competition? An Event
JOHN DAVID SIMPSON
Federal Trade Commission, Suite 5011, 600 Pennsylvania Avenue, NW, Washington, DC 20580,
Abstract. May Department Store’s 1986 acquisition of Associated Dry Goods substantially in-
creased concentration among department stores in Denver and Southern California. When this
acquisition was announced, department store chains with stores in these areas had higher abnormal
returns than other department store chains. This ﬁnding suggests that this acquisition may have
reduced competition among department stores since investors would have bid up the stock price
of rival department stores if they believed that this acquisition would lead to higher retail prices in
Denver and Southern California.
Key words: Event, merger, retailing, study.
Antitrust enforcement of retailing mergers has varied dramatically over the past
several decades. In some cases, courts have been vigorous in their application
of the antitrust laws. For instance, in 1966, the Supreme Court blocked a merger
between Von’s Grocery and Shopping Bag Food Stores that would have given the
merged ﬁrm a 7.5 percent share of the grocery retailing business in Los Angeles,
and in 1996, a district court blocked the merger of Staples and Ofﬁce Depot,
which would have given the merged ﬁrm a dominant share of the ofﬁce supply
superstore business but only a 5.5 percent share of the ofﬁce supply business.
other cases, the courts have been permissive in their application of the antitrust
laws. For instance, a district court denied the Federal Trade Commission a pre-
liminary injunction barring the acquisition by Red Food Stores of seven Kroger
I am indebted to Daniel Hosken, David Reiffen, Christopher Taylor, Aileen Thompson, the
Editor, and two anonymous referees for helpful comments. This article reﬂects the opinions of
the author and is not intended to represent the position of the Federal Trade Commission or any
United States vs. Von’s Grocery Company, 384 U.S. 270 (1966). Federal Trade Commission vs.
Staple, Inc. and Ofﬁce Depot, Inc., 970 F.Supp. 1066 (D.D.C. 1997)(Hogan J.).