Alpha Beta and Lucky Likely to Merge Monday

American Stores will be allowed to go ahead with the long-awaited merger of its Alpha Beta and Lucky supermarket chains on Monday, unless the U.S. Supreme Court agrees to hear a challenge by the state Attorney General’s Office. Both sides indicated Thursday, however, that a Supreme Court review is unlikely.

The U.S. 9th Circuit Court of Appeals in San Francisco ruled late Thursday afternoon that a stay preventing the merger should be lifted on Monday.

“I consider this a victory,” said Frank Rothman, a Los Angeles-based attorney for American Stores. “Unless the Supreme Court says differently, there will be a merger of these two chains on Monday.”

If it goes through, the merger would represent a huge boon to American Stores, which last year paid $2.5 billion for Lucky Stores with the intention of merging the chain with its own lackluster Alpha Beta operation and realizing hefty savings on advertising, distribution, warehousing and manufacturing costs.

American Stores said at the time that it planned to convert Alpha Beta stores to the Lucky banner and to institute Lucky’s low-price policy in those stores. It contended that it would pass along cost savings of between $50 million and $60 million to customers.

But last Sept. 1, state Atty. Gen. John Van de Kamp challenged the merger on antitrust grounds, charging that the consolidation would ultimately cost customers millions of dollars in higher food bills.

Since then, American Stores has contended that the legal delay has cost it on the order of $75 million in duplicative costs.

Another Recourse

The 9th Circuit Court’s ruling Thursday did not address the issue that the attorney general had actually appealed: the requirement, made by the U.S. District Court, that the Attorney General’s Office post a $16.3-million bond to pursue its case. The attorney general had earlier contended that it should not have to post such a bond since it was challenging the merger on behalf of citizens.

Andrea Sheridan Ordin, chief assistant attorney general, acknowledged Thursday that consideration of the case by the U.S. Supreme Court would be a long shot.

“The Supreme Court can hear only so many cases,” she said. “It intervenes rarely, but sometimes it does.”

However, she added that, even after a merger of the two chains, the Attorney General’s Office still would have the recourse of taking the case to trial in U.S. District Court in Los Angeles. There, she said, the state could argue for after-the-fact remedies “which would protect the consumer from anti-competitive impacts of this merger.”

Those, she suggested, might consist of restrictions on American Stores’ future growth “and whatever other remedies the district court thought appropriate.”

Her remarks indicated that the Attorney General’s Office has given up on the notion that American Stores, based in Salt Lake City, could somehow be forced to sell off a sizable number of stores.