Haggen accuses Albertsons of sabotaging store takeover, sues for $1 billion

The supermarket battle between Haggen and Albertsons is getting uglier.

Haggen, a Pacific Northwest chain, sued Albertsons for allegedly engaging in "systematic efforts" to eliminate it as a competitor in five states, including California.

According to the lawsuit, filed Tuesday in federal court in Delaware, Haggen said Albertsons started engaging in these competitive efforts after it sold 146 grocery stores to Haggen. Albertsons and Safeway were forced by the Federal Trade Commission to sell the stores as part of a merger. Among the stores are 83 in California, mostly in the south.

Albertsons said the lawsuit's allegations "are completely without merit."

The relationship between Haggen and Albertsons was already spoiling before this lawsuit.

In July, Albertsons launched the first legal salvo with a lawsuit that accused Haggen of fraud for failing to pay millions of dollars for the inventory it acquired in the new stores. In its suit, Albertsons called Haggen's actions "fraudulent in nature and done with malice."

In its own lawsuit, Haggen said Albertsons made "false representations" to Haggen about its commitment to help transform the stores it sold into competitors under Haggen. Those false promises influenced Haggen's decision to buy those stores and also its strategies going forward, the lawsuit said. Haggen said it is seeking more than $1 billion in damages.

"Albertsons' illegal campaign includes premeditated acts of unfair and anti-competitive conduct that were calculated to circumvent Albertsons' obligations under federal antitrust laws, Federal Trade Commission orders and contractual commitments to Haggen," the lawsuit said.

That campaign includes illegally accessing Haggen's confidential data, using private store conversion schedules to execute aggressive advertising and providing "false, misleading and incomplete" pricing data, which caused Haggen to inflate prices, according to the suit.

As a result of Albertsons' tactics, Haggen "was forced to close 26 of the stores that it newly acquired ... and faces the potential closure of additional stores," the suit said.

Haggen has had a rough time since converting its newly acquired stores earlier this year. In a single move, the chain went from 18 stores in Oregon and Washington to operating more than 160 markets down the West Coast.

The Bellingham, Wash., company has recently laid off employees and cut worker hours in the face of what it called "unprecedented" competition.

Shoppers have complained that Haggen's stores charge higher prices for the same products than the supermarkets they replaced.

When its first California stores opened in March, about 1,000 items -- or about 2.5% of a store's products -- were erroneously overpriced at 10 supermarkets in Los Angeles, Orange and San Diego counties. A smaller number of goods were incorrectly underpriced.

Follow Shan Li on Twitter @ByShanLi

Copyright © 2016, Los Angeles Times


3:05 p.m.: This story was updated with Albertsons response


This story was originally posted at 2:20 p.m.