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-- About This Bulletin
-- New Reprint Policy
-- Bozeman Caps Size of Retail Stores
-- Taos, New Mexico, Votes to Keep Store Size Limit
-- Big Box Proposal Tests Regional Planning in Pennsylvania
-- Missouri Coalitions Works to End Big Box Subsidies
-- Cincinnati Planning Department Abolished at Behest of Big Box
-- Iowa Supreme Court Rules in Favor of Activists, Against Wal-Mart
-- Shenandoah Valley Residents Fight Big Box Development
ALLIANCES AND COOPERATIVES
-- Independent Business Alliances Forms in Santa Fe
-- Coalitions Key to Survival of Independent Music Stores
-- Thailand Adopts Local Planning to Control Superstores
-- Britain to Review Supermarket Merger
-- Mexico Impose Code of Conduct on Wal-Mart
-- Puerto Rico Okays Wal-Mart Acquisition
-- How to Win Land Development Issues
-- The Money Trail: Measuring Local Multipliers
-- Buy Annapolis: Guidebook to Locally Owned Businesses
ABOUT THIS BULLETIN
In communities across the country, citizens are taking action to defend
and strengthen their local economies. The Institute for Local Self-Reliance (ILSR) has been tracking these efforts and will use this bulletin to provide bimonthly updates on significant developments. We hope it will serve as a tool for making connections and sharing strategies within this growing movement. We encourage readers to share news and resources by sending email to firstname.lastname@example.org.
ILSR is a nonprofit organization providing research, analysis, and innovative policy solutions for building healthy communities and strong local economies. This bulletin is part of ILSR's New Rules Project (http://www.newrules.org), which publishes a quarterly journal, The New
Rules; several electronic bulletins on specific issues; and books, including The Home Town Advantage: How to Defend Your Main Street gainst Chain Stores and Why It Matters. We also maintain a web-based
clearinghouse of model public policies at http://www.newrules.org.
Another good source of news on local efforts to keep megastores at bay is the NewsFlash! section of the Sprawl-Busters web site (http://www.sprawl-busters.com). Additional links and organizations are
listed at the end of each story.
If you're not already receiving this newsletter directly, subscribe by
sending a blank email to: email@example.com To unsubscribe, send a blank email to:
Back issues are available at http://www.newrules.org/hta/index.htm.
NEW REPRINT POLICY
Are you interested in reprinting an article from this bulletin in your
newsletter or web site? Please see our reprint policy:
I. NEW RULES
BOZEMAN CAPS SIZE OF RETAIL STORES
In February, the city of Bozeman, Montana, enacted an ordinance limiting retail stores to no more than 75,000 square feet. The measure makes permanent a temporary moratorium on construction of large retail stores in place for the past year.
The ordinance was approved by a 3-2 vote of the City Commission and took effect on March 21. It notes that "large-scale retail development imposes additional costs on public facilities and services" and "is potentially inconsistent with the existing community character and future community objectives." The measure's goals include ensuring "that development of additional areas does not degrade the Historic Core of Bozeman" and fostering "a diverse economy that will protect the economic climate for existing businesses."
In addition to capping the size of new stores, the ordinance requires retail developments between 40,000 and 75,000 square feet to meet design and site development standards. The ordinance notes that abandoned big box structures are of significant concern and requires developers to submit plans for re-using structures should the original tenant leave. It also mandates that developers include specific design elements when constructing large stores to facilitate re-use by multiple tenants (e.g., provision for interior subdivisions and multiple entryways).
The city plans to conduct a long-term study of the economic and community impacts of large-scale stores (those over 40,000 square feet) and to review and update the ordinance in five years.
-- Bozeman's ordinance and other examples of size caps:
TAOS, NEW MEXICO, VOTES TO KEEP STORE SIZE LIMIT
Cheers greeted the Taos, New Mexico, Town Council last month when members voted 3-2 to reject a proposal to allow construction of retail stores as large as 200,000 square feet. The vote reaffirms an ordinance adopted in 1999 that prohibits stores over 80,000 square feet.
The issue has been hotly debated in this community of 7,000 for more than three months. It began when a handful of residents organized under the banner La Gente ("the people") and petitioned the Town Council to lift the store size limit. La Gente's activities were bankrolled by a Chicago developer seeking to build a 338,000-square-foot shopping center anchored by a Wal-Mart supercenter on the south side of town.
A grassroots group, Taosenos Against Wal-Mart Super Stores, collected thousands of petition signatures against the development. The group contends Wal-Mart is a predatory corporation that will exploit workers, destroy local businesses, and erode the community's quality of life.
The Taos County Chamber of Commerce and the Hispano Chamber of Commerce also came out against the zoning change after surveys of their members revealed overwhelming opposition.
A survey commissioned by the town found that residents favored keeping the size cap by a 61-to-39-percent margin. Support for the size limit has increased. A similar survey taken four years ago when a Wal-Mart supercenter was first proposed, found that residents were evenly divided about the prospect of large stores. That controversy ended when the town turned down the supercenter and implemented the 80,000-square-foot cap.
The developer now says his firm will look to build a supercenter outside the town boundaries either on county or Taos Pueblo land. "They've been trying to play the town and the county against each other all along," noted Fritz Hahn of Taosenos Against Wal-Mart Super Stores. "We're not going away. We're not backing off. There will be no super Wal-Mart."
-- Examples of Size Caps, including the Taos ordinance:
BIG BOX PROPOSAL TESTS REGIONAL PLANNING IN PENNSYLVANIA
Wal-Mart wants to build a 150,000-square-foot supercenter in Upper
Hanover Township, a rural corner of Pennsylvania about one hour northwest of Philadelphia. The supercenter would anchor a large shopping complex, including twin strip malls on opposite sides of the highway.
Two years ago, Wal-Mart would have needed no more than an okay from Upper Hanover officials to proceed. But thanks to a regional plan adopted in July 2001, Wal-Mart must persuade not only the township, but five surrounding communities to approve the development.
The regional plan, which encompasses four villages and two rural townships, steers new residential and retail development into the villages and preserves outlying areas for farms and open space. The plan also prohibits retail stores over 60,000 square feet.
Wal-Mart needs two zoning changes to move ahead: one lifting the retail store size cap and another allowing retail development on land designated for open space. Zoning changes require a unanimous vote from a 12-member regional planning commission, which includes two representatives from each community.
Several commissioners have already expressed concerns about the project and wondered why Wal-Mart cannot locate in a vacant Ames department store building in the village of Pennsburg.
If Upper Hanover Township decides to pursue the development without regional support, it must give one year's notice to pull out of the regional plan.
Communities throughout Pennsylvania are following the situation closely, because the region was the first to adopt a joint land use plan after landmark revisions to the state's Municipalities Planning Code in 2000.
The rules encourage neighboring communities to enact joint land use plans and stipulate that local zoning must comply with regional plans. The law does not mandate regional planning, but does provide several carrots. Towns that participate in regional planning are exempt from a state law that requires every town to zone some space for every land use (farms, offices, etc.). Other carrots include eligibility for state planning grants; priority consideration by state agencies for infrastructure investments and other aid; and the power to establish regional tax-base sharing.
According to Janet Milkman of 10,000 Friends of Pennsylvania, a statewide membership organization which led the effort to enact the new rules, about one-fifth, or 550, of the state's municipalities have started the process of regional planning.
-- 10,000 Friends of Pennsylvania: http://www.10000friends.org See
"Planning Beyond Boundaries," a guide to regional planning that includes sample multi-municipal agreements, case studies, and legal analyses.
-- Growing Smarter Pennsylvania: http://www.landuseinpa.com This state agency has links to state land use law and plans to publish a status report on multi-municipal planning.
-- Other examples of regional planning:
-- More about tax-base sharing:
MISSOURI COALITION WORKS TO END BIG BOX SUBSIDIES
In Missouri, a coalition of independent businesses and union members are backing a bill that would reform the state's tax increment financing (TIF) law and put an end to subsidies for suburban big box stores, shopping malls, and other sprawling developments.
TIF allows a municipality to issue bonds to pay for part of the costs of a new development. Future tax revenue from the development is then diverted from the public coffers to pay off the bonds. TIF is a subsidy; it allows tax exempt and therefore low-interest capital to be used for private development.
The original intent behind TIF, which most states have adopted, was to level the playing field between economically distressed and more vital areas by providing developers with an incentive to build in ailing urban neighborhoods. In order to use TIF, municipalities must declare the site "blighted." But the definition of blighted and the rules governing TIF are so loose that the program has more often been used to underwrite sprawling retail development in well-to-do suburbs.
The wealthy St. Louis suburb of Des Peres, for example, declared the
West County Shopping Center "blighted" and provided $30 million in TIF incentives for the construction of a new mall. St. Peters, one of the fastest growing suburbs in the region, used TIF to subsidize the construction of retail stores on farmland. Richmond Heights provided $31 million in TIF to underwrite retail development across from a thriving shopping center.
Altogether, 57 percent of the total TIF-captured tax base in the St.
Louis metropolitan area lies outside Interstate 270, the region's main ring road.
Rather than lessening disparities, TIF has further tilted the playing field, according to the Missouri Grocers Association (MGA). It has favored outlying suburbs over central cities, affluent areas over low-income neighborhoods, greenfield construction over infill development, and national chains over locally owned businesses.
MGA is pushing for passage of a TIF reform bill (SB 172) sponsored by Senator Wayne Goode. Other supporters of the measure include the United
Food and Commercial Workers (UFCW) union, which represents grocery store employees who have been undercut by the expansion of non-union food retailers such as Wal-Mart; the Hometown Merchants Association (HMA), a new statewide alliance of independent businesses; and the East-West Gateway Coordinating Council, a St. Louis metropolitan area planning organization.
SB 172 would limit the use of TIF to areas characterized by moderate income (less than 80 percent of the surrounding area's median income), high unemployment (one-and-a-half times the rate of the surrounding area), or low fiscal capacity (assessed value per capita is at least 40 percent lower than the surrounding area).
It would require that municipalities conduct economic feasibility studies to determine that the development would not occur without the subsidy. It would prohibit the use of TIF on sites that are more than 25 percent undeveloped land or farmland, and projects that are primarily retail unless the development occurs in a federal enterprise or empowerment zone, or a "distressed community" as defined elsewhere in Missouri state law.
The bill would also reduce the impact of TIF on schools, libraries, and fire departments by stipulating that 25 percent of the tax revenue used to pay off the bonds be diverted to these other taxing districts.
Currently, these districts have no say over the creation of TIF districts, but lose revenue every time a municipality establishes one. Some cities have threatened the provision of essential public services by converting much of their tax base to TIF districts.
The bill has passed one reading of the Way & Means committee, but faces an uphill fight in the legislature. Suburban city governments and developers are working hard to defeat it. "There's a lot of money at stake," notes Senator Goode.
-- Full text of SB 172:
-- Missouri Grocers Association (click TIF reform):
-- East-West Gateway Coordinating Council: http://www.ewgateway.org
-- More on corporate retail subsidies:
CINCINNATI PLANNING DEPT. ABOLISHED AT BEHEST OF BIG BOX DEVELOPER
In an effort to reduce a budget deficit and make the city more "developer friendly," in the words of Mayor Charles Luken, Cincinnati has abolished its planning department.
Eight staff members and the remnants of the city's planning activities have been transferred to the community development department. The department will carry out state-mandated functions, such as zoning and historic preservation. Planning will largely be subordinate to economic development. An appointed planning commission will still advise the city council.
Eliminating the department was a top recommendation of the mayor's
Economic Development Task Force, which is chaired by Rob Smyjunas, a major big box developer. Two years ago, city planners delayed one of Smyjunas' big box projects pending the completion of a neighborhood master plan, which ultimately forced the shopping center to be scaled back.
Smyjunas has plans to develop three more big box shopping centers and is now proceeding without interference from city planners. His latest project, a large Home Depot store that involves demolishing several homes, was approved by building inspectors at the behest of the mayor and despite strong neighborhood opposition. The now defunct planning department had envisioned multi-story buildings on the site with a mixture of uses including housing.
Ironically, Cincinnati was the birthplace of U.S. zoning when it became the first city in the nation to adopt a comprehensive plan in 1925.
II. LOCAL BATTLES
IOWA SUPREME COURT RULES IN FAVOR OF ACTIVISTS, AGAINST WAL-MART
Years of fighting a Wal-Mart supercenter slated for a flood plain in a rural area of Decorah, Iowa, have finally paid off for a tenacious group of residents and small business owners.
On April 2, the Iowa Supreme Court ruled that the Decorah City Council acted illegally when it approved a Wal-Mart supercenter in the Upper Iowa River flood plain.
In 2000, the City Council granted Wal-Mart a permit to fill the flood plain. The Supreme Court ruled that the decision was not the City Council's to make. Instead, the authority belonged to the board of adjustment, a quasi-judicial body which had previously denied a fill permit for a local business seeking to build in the same area.
The Court further ruled that City Council had violated Decorah's
Comprehensive Plan, which calls for leaving flood plain land undeveloped for environmental and aesthetic reasons. All zoning decisions must comply with local comprehensive plans, the Court ruled.
Many residents who spoke at a City Council hearing on the fill permit were quoted in the Supreme Court's decision. "Even on the cold minutes of the meeting, it is apparent the council would have known. . . they had a tiger by the tail," the Court wrote. "The residents were deeply divided on the issue, raising concerns about the environmental impact, the fairness of the proceedings. . . and the prospect of 120,000 cubic yards of fill being placed in the floodplain. . ."
The lawsuit was brought by adjacent property owners with the help of public interest attorney Karl Knudson and a grassroots group called Citizens for Responsible Development.
It remains unclear what will become of Wal-Mart's $20 million building, which was completed last fall but left empty pending the outcome of the case. The Court did not specify a remedy.
Wal-Mart could attempt to negotiate with the plaintiffs, some of whom have said that the only solution is removal of the building and restoration of the flood plain. Wal-Mart also has two weeks to request that the Supreme Court review its decision.
In the meantime, attention has turned to a second lawsuit filed by the same plaintiffs, challenging the City Council's decision to rezone the site from agriculture to commercial retail.
-- Iowa Supreme Court decision:
SHENANDOAH VALLEY RESIDENTS FIGHT BIG BOX DEVELOPMENT
Citizens in Front Royal, Virginia, a town of 13,000 in the Shenandoah
Valley, are organizing to block a 184,000-square-foot Wal-Mart superstore. The development is slated for 121-acre tract of flood plain land bordering the south fork of the Shenandoah River. In order to proceed, Wal-Mart must convince the town to re-zone the land from residential to commercial.
Residents have organized under the banner "Save Our Gateway" to fight the project. They have been distributing information about the impacts of big box development to residents and town officials. A planning commission meeting on the project in December was packed.
Opponents contend the development will inundate the area with traffic, burden public services, destroy the scenic rural character of the community, and harm the river.
Storm water runoff is a major concern. "From an environmental standpoint, parking lots rank among the most harmful land uses in any watershed," notes Tom Schueler of the Center for Watershed Protection. Parking lot runoff contains high concentrations of phosphorous, nitrogen, trace metals, and hydrocarbons.
Wal-Mart has an especially bad reputation when it comes to complying with regulations governing storm water runoff. Legal action has been taken against the company in Connecticut, Texas, Massachusetts, New Mexico, and Oklahoma for multiple violations of both the Clean Water Act and state laws. The Connecticut Attorney General described the violations in his state as "irresponsible and reprehensible." They resulted in pesticides, fertilizers, and other pollutants entering several waterways, causing a "serious threat to water quality and public health."
Another major concern is the impact the development will have on public services. A memo from the Front Royal Chief of Police concluded that the town would need to hire new officers to deal with the added volume of calls. The police chief in neighboring Woodstock described a Wal-Mart store there as a "nightmare" that dramatically increased his department's workload.
The planning commission has scheduled a second hearing for mid April.
Its recommendation will factor into a final vote by the town council expected in the next few months.
-- Save Our Gateway: http://www.saveourgateway.com
III. ALLIANCE AND COOPERATIVES
INDEPENDENT BUSINESS ALLIANCE FORMS IN SANTA FE
Local businesses, nonprofit organization, and residents are uniting in
Santa Fe, New Mexico, to bolster the local economy and build a more self-reliant community.
The Santa Fe Independent Business Community Alliance (SFIBCA) formed in
December and has already attracted more than 370 members. About 60 percent of the members are independent businesses supplying a broad range of goods and services: bookstores, pharmacies, banks, radio stations, auto repair shops, accountants, printers, builders, beauty salons, and physicians. The remaining members are community organizations and individual residents.
SFIBCA grew out of meetings held last fall by a handful of residents and business owners concerned about the growing power of multinational corporations and New Mexico's high poverty rate. The group aims to address both problems by encouraging residents to support locally owned businesses and banks.
"The reason large national corporations have a lot of power and influence is that citizens have given them their money through investments and patronage," asserts Richard Johnson, a founding member of SFIBCA and owner of Ad Ventures. "It's time to stop supporting the large corporations and keep the power locally."
Shopping locally will improve the economic well-being of residents and the community, explains SFIBCA's introductory flyer. Compared to chains, local businesses employ more people and recycle a larger ercentage of their revenue back into the local economy.
SFIBCA has a two-pronged strategy. One is public education. Members sport window decals and bumper stickers that identify businesses as independently owned and urge residents to "support sustainable community." The group has also begun running print advertisements in newspapers and magazines. The first ad reminds readers, "Every consumer choice we make is a political act," and draws a link between local trade and global peace.
In a few weeks, SFIBCA will publish 15,000 copies of a 60-page directory of local businesses. The directory will include about 200 businesses and will be sprinkled with messages about why it's important to support the local economy. "We want someone who has never thought about this to be able to pick it up and say, 'I like that idea. I want to support my neighbor,'" explains Tom Knoblauch, an SFIBCA member and owner of Paint by Words.
The second prong is to encourage independent businesses to share ideas and strategies, and to buys goods and services from one another. Many businesses offer discounts to other SFIBCA members, as well as employees.
SFIBCA's suggested membership fee is $50. Many businesses have contributed more, while low-income residents are welcome to join for as little as $1. To date, SFIBCA has raised $20,000.
SFIBCA is part of a national network of independent business alliances
(IBAs) called the American Independent Business Alliance (AMIBA). AMIBA helps communities create IBAs and provides resources and tools to assist established IBAs.
-- SFIBCA: http://www.santafealliance.com
-- AMIBA: http://www.amiba.net For an introductory how-to packet with
sample materials from several IBAs, send $14 to AMIBA at 1510 Fifth
Street, Boulder, CO 80302.
COALITIONS KEY TO SURVIVAL OF INDEPENDENT MUSIC STORES
Album sales dropped more than 11 percent last year. Forecasts predict they will dive another 6 percent this year. The internet is partly to blame; the record industry says 2.6 billion music files are downloaded from the internet each month, many of which are burned to CDs. Music is also facing competition from other forms of entertainment, especially among teenagers, who are spending more money on DVDs and electronic games.
Radio consolidation hasn't helped either. Companies like Clear Channel, which owns 1200 radio stations nationally, have sharply reduced the number and variety of songs once heard on local stations. A play list at a Clear Channel station might include fewer than 30 songs. People are hearing fewer songs and buying fewer albums.
Meanwhile, mass merchandisers like Wal-Mart, Target, Circuit City, and Best Buy are selling new releases for less than the wholesale cost, using hot new albums as loss leaders to draw shoppers into their tores.
Mass merchandisers now capture more than one-third of music sales.
All of this has threatened the survival of music specialty stores. Big regional and national chains, like Tower Records and Sam Goody, are closing outlets and struggling to stay afloat. About one-third of independent music stores have closed in the last five years, according to Hits Magazine. Independents now account for just 12 percent of album sales.
But, while many have failed, some independents are finding that by banding together, stocking a deep and eclectic selection, and working with new artists, they can survive and even thrive.
"I can't even begin to quantify how successful it's been," said Paul Epstein, owner of Twist and Shout in Denver, referring to the Coalition of Independent Music Stores (CIMS). He credits CIMS with helping to put his store on the map. In just a few years, Twist and Shout has grown from a small store on a back street to an 11,000-square-foot landmark in the national music scene.
Founded eight years ago by a handful of independent store owners, CIMS now includes 35 businesses with 74 stores in 24 states. CIMS original purpose was to secure funds from record labels to promote bands simultaneously in dozens of independent stores. The chains had been doing this and capturing most of the labels' promotional budgets.
CIMS has accomplished that and more. According to record labels, CIMS stores have emerged as an influential and critical gateway for breaking and developing new bands. CIMS stores select bands to promote through in-store play, in-store performances, discounts, giveaways, and other events. The record labels pick-up the tab.
"Selling Celine Dion is not much of a challenge. Wal-Mart can do that.
Breaking a new artist---that's a challenge," said Epstein. By focusing on new and emerging artists, CIMS has helped its members establish themselves as destination stores for music fans around the country.
An even more important benefit to CIMS membership, according to Epstein, is getting advice and sharing strategies with other independent store owners. CIMS has limited membership to one store per market area. Members gather once a year to share insights and discuss strategy.
CIMS has grown about as much as it can manage and is no longer taking new members. Promotions are expensive, explains Epstein. Adding more stores would raise costs above what labels can pay to promote a new band.
But the coalition's success has inspired two similar alliances. The
Music Monitor Network includes small, independently owned chains (companies with 3 to 30 stores). The Association of Independent Media Stores formed in January with 30 members and plans to play a similar role to CIMS by networking its members and coordinating promotions.
-- Coalition of Independent Music Stores: http://www.cimsmusic.com
-- Music Monitor Network: http://www.musicmonitornetwork.com
IV. INTERNATIONAL NEWS
THAILAND ADOPTS LOCAL PLANNING TO CONTROL SUPERSTORES
The Thai government has issued a new directive designed to control the expansion of superstores. The measure requires provinces to establish committees to draft new planning rules that stipulate where large-scale stores may locate.
The directive covers all of Thailand's 76 provinces, except Bangkok and three other major cities, which already have zoning in place. The government estimates it will take three years to implement land use planning nationwide.
The directive was adopted at the request of the Commerce Ministry, which has been fielding complaints from small businesses about the rapid expansion of superstores and their predatory tactics. Foreign-owned retailers, including the UK's Tesco and Frances's Carrefour and Big C chains, have made major inroads into the Thai economy. An estimated fifteen percent of the country's small stores have closed in the last five years.
Small retailers say the new rules are too little, too late. They condemn the government for abandoning more stringent legislation in the works for almost two years. Those regulations called for establishing councils in each province to determine whether superstores were needed at all---rather than simply restricting where the stores can locate.
The government dropped the legislation last November, citing concerns that the rules could be challenged by France and Britain under international trade agreements.
The Interior Ministry organized an educational conference in February to teach local officials how to use zoning to control the growth of superstores. The government also created the Allied Retail Trade Company, which reduces costs for small retailers through volume purchasing. About 19,000 businesses have joined.
Other Asian countries are likewise grappling with a surge of global retail corporations. Two months ago, China issued a new directive requiring all local governments to implement land use plans. Retailers seeking to open new outlets will be required to submit their proposals to local councils, which will hold public hearings and decide whether the store is needed. The rules are designed to prevent over-building of retail space and unhealthy competition. Wal-Mart, Carrefour, and the Dutch chain Makro, have been expanding rapidly in China.
BRITAIN TO REVIEW SUPERMARKET MERGER
In March, British officials launched an inquiry to examine the competitive impacts of a merger between two of the country's top supermarket chains. The findings could derail attempts by Britain's top three and number five chains---Tesco, Sainsbury, Wal-Mart-owned Asda, and Morrison---to purchase the fourth largest grocery chain, Safeway.
"There is a significant prospect that these mergers may be expected to result in a substantial lessening of competition," said Trade and
Industry Secretary Patricia Hewitt, who ordered the Competition Commission to conduct the review. The top four chains already have 70 percent of the market. The Commission is expected to complete the review by August.
Meanwhile, under pressure from farm and consumer groups, the Office of
Fair Trading has decided to investigate how well a new supermarket code of conduct is working. The code was implemented last March after the
Competition Commission found extensive evidence that large supermarket chains were exploiting their market power to extract unfair prices and terms from farmers and food manufacturers.
John Breach of the British Independent Fruit Growers' Association has called the code "worse than useless," because supermarkets helped draft it and producers are too scared of retaliation to report abuses. Many groups, including Friends of the Earth and Grassroots Action on Food and Farming, are pushing the government to drop the code and impose stronger regulations.
-- Documents concerning the merger:
-- Office of Fair Trading documents on the code:
-- For background on the code, see the March 2002 issue of this
-- Friends of the Earth: http://www.foe.co.uk/campaigns/real_food
-- Grassroots Action on Food and Farming: http://www.gaff.org.uk
MEXICO IMPOSES CODE OF CONDUCT ON WAL-MART
After a ten-month investigation of Wal-Mart, Mexican antitrust officials have imposed a code of conduct on the company and other large supermarket chains.
The Mexican Federal Competition Commission (CFC) launched the investigation last May to determine whether Wal-Mart was using its market power to pressure suppliers into providing prices substantially lower than those available to other retailers (after accounting for reasonable volume discounts). Wal-Mart owns nearly 600 stores in Mexico and controls half of the country's grocery store sales.
CFC officials said they found evidence that Wal-Mart had violated antitrust laws, but not enough to pursue further legal action.
The code of conduct will govern the behavior of food retailers and suppliers. It will apply to Wal-Mart and other major supermarket chains. A similar code adopted in Britain last year has been called a failure by farm groups (see "Britain to Review Supermarket Merger" above).
-- Commission Federal de Competencia (Federal Competition Commission):
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:
HOW TO WIN LAND DEVELOPMENT ISSUES
An excellent, free 100-page guide to fighting bad land developments in
your community from Community & Environmental Defense Services.
THE MONEY TRAIL: MEASURING LOCAL MULTIPLIERS
Would you like to find out how much a locally owned business or nonprofit organization contributes to your community's economy? A new guidebook from the London-based New Economics Foundation (NEF) provides a step-by-step process for measuring the local multiplier for a particular business. A multiplier is an estimate of how much of an enterprise's revenue is re-spent within the local economy, and re-spent again---and thus its total economic contribution to the community.
"The Money Trail," has easy-to-follow directions, sample survey forms, troubleshooting tips, and case studies. The results of the case studies are intriguing. One examined two local government contracts and found that $72,000 spent with a local contractor generated more local economic activity than $120,000 spent with a non-local contractor (because the local firm purchased more goods, services, and labor locally).
-- Download The Money Trail (PDF): http://www.neweconomics.org Also see
NEF's Plugging the Leaks web site at http://www.pluggingtheleaks.org
BUY ANNAPOLIS: GUIDEBOOK TO LOCALLY OWNED BUSINESSES
"Buy Annapolis" is an 80-page directory of locally owned business in
Annapolis, Maryland. The directory sells for $15 and contains a comprehensive inventory of products and services available from hundreds of local businesses. It also includes about $3,000 worth of coupons and an essay, "Why Buy Annapolis," that outlines four economic reasons to support locally owned businesses. Buy Annapolis is the joint creation of Annapolis-based Alliance for Sustainable Communities (ASC) and ProgressivePubs, Inc., and was funded primarily by FoodRoutes Network.
Although sales have been slower than expected, the directory "has had a significant impact in terms of public awareness," according to Anne Pearson of ASC. Many residents have said that the guidebook has altered their shopping habits; officials are paying more attention to the needs and potential of local businesses; and the newspaper's business reporter has been writing more articles about small business.
-- Copies of Buy Annapolis can be ordered at:
Copyright 2003 by the Institute for Local Self-Reliance. No portion
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