Federated/May merger

CRA was retained by outside counsel for Federated Department Stores to provide an economic analysis of Federated’s $17 billion acquisition of The May Department Stores Company. This acquisition created the nation’s largest department store chain under the Macy’s and Bloomingdale’s banners and was reviewed by the FTC and the attorneys general from six states. After a six-month review, the merger was cleared with only modest divestitures. In support of this transaction, CRA economists demonstrated econometrically that 1) retailers with other formats, such as specialty retailers, big-box retailers and mass merchandisers, competitively constrain department stores; 2) neither price-cost margins nor transactional prices were systematically related to local market concentration or geographic proximity between the merging parties; and 3) expansion, repositioning, and entry by competing retail formats is both easy and timely.