Lucky’s Merger Stalled; Judge Wants New Data : Continues Freeze on Deal Until He Gets More Figures on Market Share
The $2.5-billion merger of the Alpha Beta and Lucky supermarkets remained stalled Friday as a federal judge continued hearing legal arguments in an antitrust lawsuit that seeks to block the combination.
U.S. District Judge David Kenyon agreed to keep in force his Sept. 7 ruling until he decides whether to order a full trial of the lawsuit. Under last week’s order, the judge ordered American Stores, which owns Lucky Stores and Alpha Beta, not to sell or close stores, or further combine operations or store names.
After hearing three hours of arguments on Friday, the judge said he needed more time to consider the issues and asked lawyers to provide him with more information on each supermarket chain’s share of the California supermarket business.
Opposed by State
The antitrust case seeks to halt the merger of the two chains, which was announced last summer when Lucky Stores was purchased by Irvine-based American stores, the owner of Alpha Beta.
The case was filed Sept. 1 by Atty. Gen. Van de Kamp shortly after the Federal Trade Commission approved the merger on the condition that American divest itself of 37 stores in areas where its concentration would create near-monopolies. Only six of those stores are in Southern California.
Lucky operates 354 markets in California, while American operates 249 Alpha Beta markets and one so-called superstore in San Diego under the “Advantage” name. Even with the divestiture of 37 stores, the Lucky-Alpha Beta combination would become the nation’s largest supermarket chain with 567 stores.
The market share data is crucial to support Van de Kamp’s argument that the merger should be blocked.
The attorney general’s office maintains that the merger would give American control of more than 25% of the state’s supermarkets, which in turn would create an “anti-competitive” environment and cost consumers more than $400 million a year in higher food prices.
During Friday’s session, Deputy Atty. Gen. H. Chester Horn argued that consumers’ prices rise when markets become more highly concentrated.
But American’s attorneys argued in court Friday that because of the economies of scale, and because the Alpha Beta stores would adopt Lucky’s discount pricing, the merger actually would save consumers money. Court papers have stated the merger would actually mean a savings of $50 million a year.
“All common sense and logic shows that this is a market where competition is so severe, prices will not rise,” argued Frank Rothman, a lawyer for American. “Everybody else in the marketplace would eat our heart out.”
Furthermore, the “completed merger” by Alpha Beta and Lucky would be difficult to undo, Rothman said.
