Reuters reports that discount retailer Dollar Express has "filed a lawsuit accusing rival Family Dollar and its parent company Dollar Tree Inc of driving it out of business ... Dollar Express was formed in 2015 when private equity group Sycamore Partners II LP bought some 330 stores in 35 states from Family Dollar and Dollar Tree. Family Dollar had to sell the stores in order to win antitrust approval to merge with Dollar Tree.
"In the lawsuit filed Thursday, Dollar Express accuses Dollar Tree of using confidential information to open new shops near the divested stores to drive them out of business," as well as putting unqualified managers who were unable to compete into the divested stores.
The situation is compared in the story to what happened when government regulators forced Albertsons to sell 168 stores to Haggen in order to complete its acquisition of Safeway; Haggen was unable to handle the stores and filed for bankruptcy within months; Albertsons was then able to buy back stores that it wanted to keep.
"In the lawsuit filed Thursday, Dollar Express accuses Dollar Tree of using confidential information to open new shops near the divested stores to drive them out of business," as well as putting unqualified managers who were unable to compete into the divested stores.
The situation is compared in the story to what happened when government regulators forced Albertsons to sell 168 stores to Haggen in order to complete its acquisition of Safeway; Haggen was unable to handle the stores and filed for bankruptcy within months; Albertsons was then able to buy back stores that it wanted to keep.
- KC's View:
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At some point, companies like Haggen and Dollar Express have to take some responsibility for biting off a lot more than they could chew.
That said, I continue to believe that federal regulators need to rethink their definitions when it comes to things like competition and antitrust. The world has changed, there are a lot of new players and circumstances to take into consideration, and our regulations ought to reflect that.
