Hearing Set on State’s Bid to Block Store Merger

A federal judge said Friday that he will hear arguments next week on the state’s request for a temporary restraining order to stop the merger of Alpha Beta and Lucky supermarkets.

U.S. District Judge David Kenyon set a hearing for Tuesday after lawyers for Alpha Beta’s parent company, American Stores Co., based in Irvine, assured him that they would take no actions over the Labor Day weekend on the merger.

On Thursday, state Atty. Gen. John K. Van de Kamp sued American Stores and Lucky Stores Inc., based in Dublin, claiming that the merger would violate antitrust laws and lead to higher food prices by lessening competition.

The deal and the unrelated purchase of 172 Safeway stores in Southern California by the Vons Cos. have already been approved by the Federal Trade Commission, which analyzes the effect of business combinations on competition and prices. Together, the Vons and American chains now own half the supermarkets in the state.

In giving its approval, the FTC has ordered American and Lucky to sell 37 stores. To satisfy the FTC concerns about competition, Vons has sold nine Safeway and three Vons stores.

American Stores contends that the merger of 248 Alpha Beta stores and 343 Lucky supermarkets in California will lead to lower prices by reducing advertising costs and streamlining costs.

Frank Rothman, a lawyer for American Stores, strongly protested Van de Kamp’s filing of the suit to block the merger after it already had been agreed upon.

“We (American Stores) paid $2.5 billion to 42,000 (Lucky) shareholders representing 34 million shares, and that money is gone, never to be retrieved,” Rothman complained. “We have completed the merger, people have left their jobs and Alpha Beta management is now in place.”

Earlier in the day, Van de Kamp stood outside an Alpha Beta market in the predominantly Latino Westlake district of Los Angeles and accused the FTC of failing to protect the interests of California consumers.

“This injustice will strike most cruelly at those least able to afford it--the poor, the elderly, the least mobile of our citizens, those who cannot afford high prices and who cannot flee their neighborhood market for distant lower prices,” Van de Kamp said.

Van de Kamp’s staff is negotiating with Vons on a settlement of antitrust allegations about the El Monte-based grocery chain’s $408-million purchase of Safeway stores in Southern California.

Van de Kamp said the talks appeared to be making progress but warned that he would take Vons to court immediately if the negotiations broke down. He would not disclose what Vons must do to resolve the antitrust issues to his satisfaction.

Vons, which operated 183 stores, has already started converting the Safeways.