Bill Text: CA AB853 | 2023-2024 | Regular Session | Enrolled

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Retail grocery stores and retail drug stores: acquisition: notice to Attorney General.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2023-10-08 - Chaptered by Secretary of State - Chapter 457, Statutes of 2023. [AB853 Detail]

Download: California-2023-AB853-Enrolled.html

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Enrolled  September 11, 2023

Passed  IN  Senate  September 06, 2023

Passed  IN  Assembly  September 07, 2023

Amended  IN  Senate  July 13, 2023

Amended  IN  Senate  July 03, 2023

Amended  IN  Assembly  March 29, 2023

Amended  IN  Assembly  March 15, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill

No. 853

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Introduced by Assembly Member Maienschein

February 14, 2023

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An act to add Part 14 (commencing with Section 14700) to Division 3 of Title 1 of the Corporations Code, relating to retail grocery stores and retail drug stores.

LEGISLATIVE COUNSEL'S DIGEST

AB 853, Maienschein. Retail grocery stores and retail drug stores: acquisition: notice to Attorney General.

Existing law, upon change in control of a grocery establishment, establishes a transitional period of employment for eligible grocery workers, as specified.

This bill would prohibit a person from acquiring any voting securities or assets of a retail grocery firm or retail drug firm, as those terms are defined, unless both parties give, or in the case of a tender offer, the acquiring party gives, specified notice to the Attorney General no less than 180 days before the acquisition is made effective. The bill would require an acquiring party who is required to file notice pursuant to the federal Hart-Scott-Rodino Antitrust Improvements Act of 1976 to submit the form and documentary material required to be submitted under that federal act, and would specify information to be included in the notice for a party who is not required to file notice pursuant to that federal act, including information required to assess the competitive effects of the proposed acquisition and to assess the economic and community impact of any planned divestiture or store closures. The bill would require the notice to be given under oath and affirmation. By expanding the scope of the crime of perjury, the bill would impose a state-mandated local program. The bill would give the Attorney General 180 days to evaluate the transaction, and would require the Attorney General to charge the acquiring party a filing fee, as specified, incident to the cost for the Attorney General to receive, review, and analyze the notice. The bill would authorize the Attorney General to adopt regulations to effectuate the bill’s provisions. The bill would deem as confidential any information submitted to the Attorney General under provisions of federal law rendering them confidential. The bill would make a violation of the bill’s provisions subject to injunctive relief and other equitable remedies, and would entitle Attorney General to recover attorney’s fees and costs and impose civil penalties of up to $20,000 for each day of noncompliance.

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

This bill would make legislative findings to that effect.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Digest Key

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 The Legislature finds and declares that the increasing consolidation of chain retail grocery stores, which are primary points of food distribution throughout California, and chain retail pharmacies, which are primary points of medicine distribution throughout California, impacts the public health of Californians. These consolidations not only potentially affect the supply and affordability of food and medicine, they potentially affect the supply of experienced grocery retail workers with knowledge of proper sanitation and health regulations, and licensed pharmacists, pharmacy technicians, and pharmacists-in-charge, who are entrusted with supplying safe and accurate medications and dosages to ailing Californians. The Legislature further finds and declares that, for these vital public health and safety reasons, the increase in merger activity in the chain retail grocery and chain retail pharmacy sectors requires giving the Attorney General certain and specific tools to review these mergers.

SEC. 2.

 Part 14 (commencing with Section 14700) is added to Division 3 of Title 1 of the Corporations Code, to read:

PART 14. Retail Grocery Firms and Retail Drug Firms

14700.

 (a) No person shall acquire, directly or indirectly, any voting securities or assets of a retail grocery firm or retail drug firm unless both parties give, or in the case of a tender offer, the acquiring party gives, written notice to the Attorney General in accordance with this part.

(b) For purposes of this part, the following definitions apply:

(1) “Acquiring party” means a person by whom or on whose behalf the merger or other acquisition of control is to be effected and is either of the following:

(A) Is required to provide notice of the merger or acquisition to the Federal Trade Commission or the United States Department of Justice pursuant to the federal Hart-Scott-Rodino Antitrust Improvements Act of 1976 (15 U.S.C. Sec. 18a).

(B) Is acquiring more than a total of 20 retail drug firms or retail grocery firms.

(2) “Retail drug firm” means a person, as defined in Section 18 of the Labor Code, including a proprietorship, joint venture, corporate officer or executive, that has one or more businesses or establishments located within the state and is identified as a retail business or establishment in the North American Industry Classification System within the retail trade category 45611.

(3) “Retail grocery firm” means a person, as defined in Section 18 of the Labor Code, including a proprietorship, joint venture, corporate officer or executive, that has one or more businesses or establishments located within the state and is identified as a retail business or establishment in the North American Industry Classification System within the retail trade category 44511 and 455211.

14701.

 (a) The written notice shall be filed with the Attorney General no less than 180 days before the acquisition is made effective. The notice shall be made under oath or affirmation, and shall comply with the requirements of subdivision (c).

(b) If any transaction requiring written notice pursuant to this subdivision commences before the effective date of this section, the written notice shall be given to the Attorney General within 30 days before the transaction is made effective. Upon receiving notice, the Attorney General has 180 days to evaluate the transaction, during which time the effective date of the transaction shall be tolled. If any material change occurs in the facts set forth in the written notice filed with the Attorney General, an amendment setting forth the change and copies of all documents and other material relevant to the change shall be filed with the Attorney General within two business days after the amendment is made by, or provided to, the acquiring party.

(c) The notice required to be given to the Attorney General shall comply with either of the following:

(1) If the acquiring party is required to file notice with the Federal Trade Commission or the United States Department of Justice pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (15 U.S.C. Sec. 18a), the notice shall contain the same form and additional documentary material required under that act and any implementing regulations under that act.

(2) If the acquiring party is not required to file notice with the Federal Trade Commission or the United States Department of Justice, as specified in paragraph (1), the notice shall contain all of the following information:

(A) The name and address of each acquiring party and a report of the nature of its business operations during the past five years or for a lesser period if the person and their predecessors have been in existence less than five years.

(B) An informative description of the business intended to be done by the person and the person’s subsidiaries, including, but not limited to, documents concerning its business or corporate structure, governance, or management.

(C) A list of all individuals who are or have been selected to become directors or executive officers or who perform or will perform functions appropriate to the positions.

(D) The source, nature, and amount of the consideration used or to be used in effecting the merger or other acquisition of control, a description of any transaction in which funds were or are to be obtained, including any pledge of the drug or grocery retail firm’s stock or the stock of any of its subsidiaries or controlling affiliates, and the identity of persons furnishing the consideration. If a source of the consideration is a loan made in the lender’s ordinary course of business, the identity of the lender shall remain confidential upon request of the person filing the statement.

(E) Fully audited financial information as to the earnings and financial condition of each acquiring party for the preceding five fiscal years or for a lesser period if the acquiring party and its predecessors have been in existence for less than five years, and similar unaudited information as of a date not earlier than 90 days before the written notice.

(F) Any plans or proposals that an acquiring party may have to liquidate the retail grocery or retail drug firms, to sell its assets or merge or consolidate it with any person, or to make any other material change in its business or corporate structure or management.

(G) The information required to assess the competitive effects of the proposed acquisition, giving particular attention to the effects on the proposed chain retail grocery store acquisition on consumers, including, but not limited to, consumer choice, food pricing, access to food, and food deserts, and factors affecting the supply of experienced grocery workers, including wages, benefits, and unemployment and chain retail pharmacy on patients, including, but not limited to, patient choice, medicine pricing, access to medications, and factors affecting the supply of licensed pharmacists, pharmacy technicians, and pharmacists-in-charge.

(H) Information required to assess the economic and community impact of any planned divestiture or store closures, including, but not limited to, the impact on food deserts, food supply, economic mobility, unemployment, and small businesses.

(d) The Attorney General shall charge the acquiring party a filing fee for the cost to the Attorney General to receive, review, and analyze any notice under this section, which shall not exceed the reasonable regulatory costs to the Attorney General incident to performing its administrative duties under this section. The fee shall be based on the size of the transaction as of the date of the filing of the notice, but shall not exceed .00045 percent of the combined sales of the parties to the merger or acquisition for the fiscal year prior to the filing of the notice.

(e) The Attorney General may use the notice, documents, and information disclosed under to this section in a judicial action in state or federal court or an administrative action involving the merger or acquisition.

14702.

 (a) The Attorney General may adopt regulations to effectuate this part that are necessary or appropriate for the protection of workers, consumers, and the public interest.

(b) The regulations may specify exemptions from the notice requirement for acquisitions that, by virtue of the size, business volume, or number of employees are unlikely to materially affect competitive markets in California.

(c) The regulations may authorize the Attorney General to request additional materials.

(d) The regulations may authorize adjustments in the filing fee, based on the size of the transaction, subject to the maximum amount set forth in subdivision (d) of Section 14701.

14703.

 If the Attorney General determines that they cannot complete an evaluation of the competitive effects of the acquisition before the parties intend to consummate the acquisition, the Attorney General may seek an order from the Superior Court of the County of Sacramento temporarily staying or preliminarily enjoining the acquisition for such time as is reasonably necessary for the Attorney General to complete the analysis.

14704.

 (a) For acquisitions to which Section 18a of Title 15 of the United States Code applies, the Attorney General shall consider the extent to which information required to be submitted to the United States Department of Justice and the Federal Trade Commission may satisfy some or all of the need to carry out the applicable state laws. Any information that has been submitted to the Attorney General under provisions of federal law rendering them confidential shall be deemed to be confidential under California law.

(b) The submitting party may designate information submitted pursuant to this part as privileged or confidential. If the Attorney General disputes any claim of privilege or confidentiality, the Attorney General may give notice to the submitting party of that fact and give the submitting party, or other person interested in the claim of privilege or confidentiality, an opportunity to seek an order from the Superior Court of the County of Sacramento requiring the Attorney General not to make the designated information public. Except for information that the Attorney General agrees is privileged or confidential, or the court so determines, the information shall be available to the public under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).

(c) The Attorney General may disclose any notice and information filed under this part to the attorney general of any other state, the Federal Trade Commission, the United States Department of Justice, or to another state agency, as long as that other state attorney general, state agency, or federal agency operates under a law substantially similar to this statute to guarantee the privileged or confidential nature of the notice and information disclosed.

14706.

 Nothing in this section or any other law shall preclude the Attorney General or any person from bringing an action pursuant to this article or any other law to enjoin or seek divestiture of assets or ownership interests obtained in a completed acquisition or otherwise to restore competition.

14707.

 (a) The failure to provide written notice, amendment to written notice, or other material required to be provided pursuant to this part shall be a violation of this part.

(b) In addition to any legal remedies the Attorney General may have, the Attorney General shall be entitled to injunctive relief and other equitable remedies a court deems appropriate for a violation of this part, shall be entitled to recover its attorney’s fees and costs incurred in remedying each violation, and shall be entitled to civil penalties of up to twenty thousand dollars ($20,000) for each day of noncompliance with the requirements of Section 14700.

SEC. 3.

 The Legislature finds and declares that Section 2 of this act, which adds Section 14704 to the Corporations Code, imposes a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution. Pursuant to that constitutional provision, the Legislature makes the following findings to demonstrate the interest protected by this limitation and the need for protecting that interest:

(a) The provisions of this measure addressing the possible confidentiality of certain documents under federal law and state law are required to ensure that this measure and implementation of this measure do not violate federal law and existing state law.

(b) The interest in justifying confidentiality as described in this measure is the necessity to ensure the measure complies with federal law and is not in conflict with existing state law.

SEC. 4.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.