American Stores’ Merger of Lucky, Alpha Beta OKd

American Stores said Wednesday that it will be allowed to merge its Lucky and Alpha Beta supermarket chains on July 10 because a federal appeals court had rejected a challenge by California Atty. Gen. John Van de Kamp.

However, a special assistant to Van de Kamp indicated that the attorney general will appeal the antitrust case to the Supreme Court.

American Stores said in a statement that the U.S. 9th Circuit Court of Appeals in San Francisco decided Monday not to grant the attorney general’s request for a rehearing of a March 31 appeals court ruling that would have allowed the merger to proceed.

The decision is the latest development in a long-running battle that has frustrated American Stores’ effort to reap the benefits of its $2.5-billion purchase of Lucky Stores. The acquisition made American Stores, based in Salt Lake City, the nation’s largest supermarket operator.

When American Stores bought its Dublin, Calif., rival last year, it planned to operate its lackluster Alpha Beta chain under the Lucky banner. Lucky has a strong reputation as a low-price leader.

American Stores vowed at the time to adhere to Lucky’s low-price strategy and to pass along savings in advertising and other expenses. The company has said the merger could result in savings of as much as $60 million a year.

But as American was on the verge of merging the chains, the attorney general on Sept. 1 launched his challenge on the grounds that the consolidation would reduce competition and result in higher prices.

Michael Strumwasser, the special assistant attorney general, said Wednesday: “We are not giving up. We’ve expected all along that if necessary we would take this to the Supreme Court.” The first step, he said, would be to ask the appeals court to temporarily block the July 10 merger.

Frank Rothman, a Los Angeles-based attorney for American Stores, noted that the Supreme Court has adjourned for this session and probably would not be able to rule until October.

“So the question now is, will the 9th Circuit give any relief to the attorney general?” Rothman added. “They’ll have to move very quickly, because come July 10 we’re free to go.”