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Firm Seeks End to Ban on Merger : American Stores Appeals Lucky Ruling

Times Staff Writer

American Stores of Irvine on Monday filed its appeal of last week’s federal court order barring the merger of its Alpha Beta and Lucky supermarket chains.

American spent $2.5 billion in June to acquire Lucky with the intention of merging its Alpha Beta chain into the Lucky operation. The merger would create the largest supermarket chain in California.

The appeal filed Monday in Los Angeles challenges U.S. District Judge David Kenyon’s decision to block that merger pending trial of an antitrust suit filed by the state attorney general.

“We’re comfortable that on appeal the order will be reversed,” said Stephen Axinn, an attorney for American. A reversal would mean that the two chains can complete the merger that began when American purchased Lucky Stores in June.

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Kenyon ruled Thursday that combining the two chains would “substantially and irreparably harm” California consumers and ordered a trial to see if the merger violates federal antitrust laws. At the time, American officials promised an immediate appeal.

Lawyers with the office of Atty. Gen. John K. Van de Kamp, who filed the lawsuit, could not be reached for comment late Monday. The office had argued that the merger--the biggest in supermarket history--would cost shoppers millions of dollars by reducing competition. Van de Kamp had said after Kenyon’s ruling was issued that he expected American to appeal.

Kenyon essentially had agreed with Van De Kamp’s argument that the merger would stifle competition. In his written opinion he said that while American would save money by efficiencies in combining the two operations, “the court is not convinced that defendants will invariably pass these savings on to consumers.”

American’s 50-page appellate brief is to be filed today with the U.S. 9th Circuit Court of Appeals in San Francisco, Axinn said. It contends, among other things, that there is no legal precedent for Kenyon’s order and that American’s market concentration in California “is low” compared to other chains in other parts of the country, Axinn said.

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The appeal also contends that the Federal Trade Commission’s approval of the merger on condition that American divest itself of 37 stores “is entitled to great weight” and that Judge Kenyon was wrong to conclude that the attorney general’s office probably will win at trial, Axinn said.

The attorney general’s office is expected to file papers opposing American later this month. After that, the appeal will be argued at the 9th Circuit in Pasadena, probably in late October or next month, case attorneys said.


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