Buying out a competitor to shut it down

I have heard of two cases where one company bought out another to shut it down and eliminate the competition.

The first was that Costco did it to Price Club. I looked up Costco in the Urban Legends and there is the story that they merged with Price Club, called themselves Price Costco for a while then dropped 'Price' to become just Costco again.

The second was that Kentucky Fried Chicken bought out H. Salt Esq. (Fish & Chips) and closed down all their stores because H Salt was taking away customers.

I don't know whether either story is true, but I do know I liked to go to both Price Club and H.Salt and both just suddenly seemed to disappear.

[snopes]

Companies buy up, merge with, or drive competitors out of business all the time to increase their market share. I don't know why this would really be considered remarkable (other than that it's probably not economically feasible to buy up another large chain and then shut down all its outlets).

- snopes

Anti-trust laws prevent companies from buying up all their competition.

Mergers between large companies must be approved.

In the first case since there was still a competitor in Sam's clubs and lesser competition from supermarkets so the merger was approved.

KFC is owned by Yum Brands which operates or licenses Taco Bell, Pizza Hut, and Long John Silver's restaurants worldwide, and A&W Restaurants. There is no mention of H Salt being bought here

But each individual store may be owned by a franchisee. In that case if they owned a KFC and they may have gone and purchased a H Salt franchise and then the H Salt store was closed.

[James G]

In the UK, Electronics Boutique brought out GAME, and then after a while began trading solely under the GAME brand. (Presumably because it had a better reputation) Odly though they kept EB style furnishings in their stores. GAME has now brought out Gamestation, although currently plans to run the two franchises seperately due to their slightly different market positions. This means that EB (Trading as GAME) is pretty much the only specialist computer and videogame retailer in the UK. I can only assume that the buyout was approved on grounds that many media stores sell a substantial quantity of games, and their is significant competition from online retailers.

Meanwhile on the books side of things, Waterstones rescued and subsumed the ailing Ottakers; in music HMV purchased and rescued a number of Fopp stores when the chain fell into administration, and is not only branding them seperately from its main HMV stores, but seems to have afforded them some independence with regard to management.

So its not unusual to see companies buy up their competitors, and exactly what happens to the purchased stores will depend on how much the customer base overlaps, as well as managment costs for trading under two brands. In most cases I'm disturbed when two competitors become consolidated, but in many cases the trade is what prevents one of the stores from going down the drain completely.

[BringTheNoise]

Originally Posted by James G

GAME has now brought out Gamestation, although currently plans to run the two franchises seperately due to their slightly different market positions.

They'd better keep them separate. I really like Gamestation, and my experiences with GAME have been... less than pleasant.

[James G]

Originally Posted by BringTheNoise

They'd better keep them separate. I really like Gamestation, and my experiences with GAME have been... less than pleasant.

Unfortunately I've heard rumours that Gamestation plans to dispose of a significant proportion of its retro stock, which frankly isn't a good sign of it maintaining its identity. ( http://www.eurogamer.net/forum_threa...read_id=109183 ) But I haven't yet seen it reported anywhere more credible.

[RobDBlackwolf]

AOL bought up CompuServe, and started to shut down the CServe forums, one by one.

CServe still exists though, but is a mere shadow of what it once was.

[Malruhn]

MTV was the sole music source for quite some time, then as VH1 was about to launch, MTV bought them out (I heard the day before launch), and for several years, MTV was the sole source of videos on the idiot box.

Now that MTV is out of the music television arena, I guess this point has become mootified!

[rhiandmoi]

Originally Posted by Malruhn

MTV was the sole music source for quite some time, then as VH1 was about to launch, MTV bought them out (I heard the day before launch), and for several years, MTV was the sole source of videos on the idiot box.

Now that MTV is out of the music television arena, I guess this point has become mootified!

I believe they were always owned by the same parent company. VH1 was supposed to be MTV for a more "sophisticated" audience. They played a lot of adult contemporary in the early days.

[Nonny Mouse]

This cold I have must be affecting my brain. When I saw this thread title a moment ago I read it as burying a computer to shut it down.

Nonny

[Latiam]

The Price Club in our neighbourhodd changed to Costco.

I really didn't see any difference except the signs. We still go.

[Hero_Mike]

Originally Posted by noysey

The second was that Kentucky Fried Chicken bought out H. Salt Esq. (Fish & Chips) and closed down all their stores because H Salt was taking away customers.

I remember an H.Salt Fish & Chips here in Canada when I was maybe 10 years old - before 1980 anyway. From what I remember, they were a "competitor" with KFC only as far as they sold fast food. Back then, KFC sold chicken and only chicken - all you could get was "original recipe" chicken in various sizes, fries, bread, and salads. No wings, no sandwiches or wraps - nothing like that. H.Salt sold fish and chips - various kinds of fish. I remember that deep fried shrimp was an exotic thing for the time. The only similarity is that both places sold deep fried stuff - but chicken and fish are very different. I'd believe this if KFC bought out, say, some other fried chicken place, but fish is not chicken. Buying them out to gain market share makes sense - buying them to close them does not.

[Roadsterboy]

IIRC, Carl's Jr. bought out Hardee's to give itself some outlets in the eastern half of the country. The name stayed the same, but Hardee's has lots of crossover items with Carl's Jr. The only reason they kept the Hardee's name is because it has great name recognition in many areas of the south east.

Hardee's did the same thing when their parent company started buying up Burger Chef locations (I vaguely remember Burger Chef commercials on telly when I was a kid, but don't think I ever ate at one). Unless the Burger Chef was near an Hardee's location, it was converted to a Hardee's.


-RB

[RivkahChaya]

I remember when all the Burger Chefs around here became Hardees' (how the heck does one pluralize that?), but I had heard that Burger Chef was going under, and Hardee's just bought the physical locations. That could be wrong, but at the time, there were no Hardees' in the area, so if one was on the way up, and the other on the way out, it would make a lot of sense. The rumor at the time was also that the much larger McDonald's had undersold the smaller Burger Chef, which couldn't compete, and that's why it went under.

[NobodyAtAll]

I have always heard that Henry Ford bought out and closed down trolley and street car lines in towns all over America to spur the public into buying cars. Urban legend?

[Roadsterboy]

Originally Posted by NobodyAtAll

I have always heard that Henry Ford bought out and closed down trolley and street car lines in towns all over America to spur the public into buying cars. Urban legend?

Not sure about Ford, but General Motors did in fact buy trolley lines in several cities, and converted them to bus lines.

-RB

[Roadsterboy]

Originally Posted by RivkahChaya

I remember when all the Burger Chefs around here became Hardees' (how the heck does one pluralize that?), but I had heard that Burger Chef was going under, and Hardee's just bought the physical locations. That could be wrong, but at the time, there were no Hardees' in the area, so if one was on the way up, and the other on the way out, it would make a lot of sense. The rumor at the time was also that the much larger McDonald's had undersold the smaller Burger Chef, which couldn't compete, and that's why it went under.

I found some info on Wikipedia about this, and apparently if there was a Hardee's fairly close, the Burger Chef could stay open. The last known Burger Chef closed in 1996. I am now on a search for the last unknown Burger Chef location.

-RB

[BringTheNoise]

Originally Posted by James G

Unfortunately I've heard rumours that Gamestation plans to dispose of a significant proportion of its retro stock, which frankly isn't a good sign of it maintaining its identity. ( http://www.eurogamer.net/forum_threa...read_id=109183 ) But I haven't yet seen it reported anywhere more credible.

Looks like I'm going to be stuck with eBay for my retrogaming needs

[James G]

Originally Posted by BringTheNoise

Looks like I'm going to be stuck with eBay for my retrogaming needs

Charity shops can be a good bet if you're not looking for a specific title. I've picked up several good deals on games on my hit list. I've noticed that a few shops seem to have wised up to the retro games market, and know which ones to put in the window, still others have seemingly no understanding of the difference between a PS3 game and one for the ZX Spectrum.

[Not_Done_Living]

hey MY company is currently doing this now..

I work for HP. The "merged" with Compaq in a highly published, highly emotional, and highly protested manner about 7 years back.

The kept about half of the Compaq executives, converted the Compaq brand to a problem plagued budget brand, then promptly started mass rolling layoffs of Compaq staff.

You will be hard pressed to find a Compaq anywhere now... they are slowly going away...