Puerto Rico Okays Wal-Mart Acquisition

Small business owners are crying foul over an agreement reached between the Puerto Rican government and Wal-Mart. The deal allows Wal-Mart to proceed with its purchase of an island supermarket chain, which will give it control of 40 percent of Puerto Rico's grocery sales.

Last year Wal-Mart won approval from the Federal Trade Commission to purchase the Amigo supermarket chain. Puerto Rican officials said the deal violated local antitrust laws and sued to block the merger.

Wal-Mart challenged Puerto Rico's move in a federal court, which ruled in December that the Puerto Rican government had overstepped its authority. The judge ruled that states have only limited authority to review and reject mergers based on their own antitrust laws.

Puerto Rico appealed the decision. Attorneys general from nineteen states weighed in on Puerto Rico's behalf, arguing that a century of legal percent clearly establishes a state's right to set its own antitrust rules and merger conditions regardless of federal policy.

Facing an uncertain legal outcome, Wal-Mart sought a settlement and reached a deal with the Puerto Rican in February. It requires Wal-Mart to maintain the current level of employment at the Amigo chain (4,000 jobs) for the next ten years, maintain the current level of purchases of Puerto Rican farm products for the next ten years; and divest two stores in areas with potential monopoly problems.

A coalition of small business and consumer groups were surprised and dismayed by the deal, which they say does not go far enough and threatens to undermine Puerto Rico's economic vitality and leave consumers in some communities at the mercy of a near monopoly.

• American Antitrust Institute filing
• FTC order and related documents
• For background see the February 2003 issue of this bulletin

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