Broadway-Hale Stores, Inc.

Text (OCR of the scan at left; may contain errors)

Opinion 80 F.T.C.

Broadway-Hale’s arguments were supported by the unanimous testimony of the witnesses appearing at the hearing. All supported the Broadway-Hale contentions respecting the general difficulties of entry into the New York market—the necessity to have a Fifth Avenue flagship store in order to enter the suburbs in the broader New York Metropolitan market, the unstable financial condition of Bergdorf Goodman and its need either to exit or to expand, and the massive financing which would have been required and would probably have been unavailable for the latter.

Complaint counsel relied in support of its position in part on its analysis cf Bergdorf Goodman’s financial statement which it claimed indicated a solid profitability position for Bergdorf in the years just preceding the calendar year 1970 and which it argued demonstrated that Bergdorf if it chose could secure the financing which it would need in order to expand. Complaint counsel argued, therefore, that it was not clear that Bergdorf Goodman would necessarily exit the New York market if this acquisition were disapproved. The other evidence relied upon by complaint counsel was Nelman-Marcus’ entry into several markets on its own. This evidence, complaint counsel argued, tended to refute the Broadway-Hale testimony as to its inability to enter the New York market internally. We recognize. of course, that competitive conditions involved here are dynamic to a certain degree and that events and conditions which seem certain and inevitable one day may be altered by the business realities of the next. We recognize that by approving this acquisition we assume the risk that had we denied the request. Bergdorf might have remained a viable competitor, Broadway-Hale might have entered the market independently and competition would thereby have been advanced. On the record before us, this possibility must be considered exceedingly remote whereas there is a substantial probability that a denial of the request would result in a net loss of competition.

We remain today as concerned with competitive conditions in the GMAF industry as we were at the time the order against petitioner and similar orders were issued. and it is our intention to continue to scrutinize mergers in this industry with great care. It is precisely because of this concern that we feel it is essential that we adopt in this matier the action which will yield the greatest probability of procompetitive results. Judged by this standard and by the standard announced in our earlier opinion, we conclude that the request should be approved. The circumstances which we have described with respect to the competitive condition of the mid-Manhattan high- Or Or ACME QUILTING CO., INC., ET AL. 6 653 Complaint fashion market and the future plans of the petitioning parties combine to create a situation which is perhaps unique in this country. Thus, the result in this matter must be limited strictly to the singular facts here present and should not be viewed as having a broader reach.

Accordingly, on the basis of the evidence before us, we approve the proposed acquisition.