Judge Will Rule on Bid to Block Lucky Merger

A federal judge will rule today on the state attorney general’s request to temporarily block a $2.5-billion merger of the Alpha Beta and Lucky supermarket chains--a merger that the stores’ attorney said has already been completed.

U.S. District Judge David Kenyon listened to more than two hours of legal wrangling Tuesday between attorneys for the market chains and Atty. Gen. John Van de Kamp, who is suing to block the merger on grounds that it violates state and federal antitrust laws.

By acquiring Lucky Stores, Alpha Beta’s parent--American Stores of Irvine--will operate a total of 591 supermarkets in California, all under the Lucky name.

Van de Kamp filed the antitrust suit last week, apparently after negotiations with American Stores broke down.

The attorney general’s office also opposed the acquisition by Vons of Safeway’s Southern California assets, including all its Southland supermarkets earlier this year. But Van de Kamp did not file a lawsuit to block that deal. Vons, with 183 markets, acquired 172 Safeway stores, plus the company’s Southern California warehouses, dairies, bakeries and ice cream plants.

A top official of the attorney general’s office said Tuesday that talks with Vons officials aimed at mitigating the “anti-competitive” nature of the deal are progressing, while similar talks with American Stores had not been fruitful.

Among the mitigating measures being discussed with Vons are the divestiture of stores and establishment of guarantees that Safeway directors won’t influence Vons directors to refrain from competing with Safeway in Northern California, where Vons has no presence.

A major issue in the Lucky-Alpha Beta merger seems to be the sheer size of the resulting chain, and divestiture of stores in areas where American Stores would have a virtual monopoly appears to be the attorney general’s goal.

In arguments Tuesday before Kenyon, attorneys for Van de Kamp claimed that the Lucky-Alpha Beta merger would cost California consumers $400 million a year in higher food bills.

But American Stores lawyers claimed that the chain, now run by Lucky executives, will provide consumers with $50 million in estimated annual price reductions.