Alpha Beta-Lucky Merger Blocked : O’Connor Delays Deal for Court Review of Van de Kamp Appeal

A Supreme Court justice issued a last-minute order today blocking the $2.5-billion merger of the Lucky and Alpha Beta supermarket chains in California until the full court can consider an appeal by state Atty. Gen. John K. Van de Kamp.

Justice Sandra Day O’Connor granted Van de Kamp’s request to order a stay of the merger, which was to have taken place today. The order apparently does not require Van de Kamp to post a $16.3-million bond that a federal judge had earlier required as a condition of the appeal, said Chief Assistant Atty. Gen. Andrea Ordin.

O’Connor, who handles emergency appeals to the high court from rulings by the U.S. 9th Circuit Court of Appeals, did not issue a written opinion with her order. But she said the stay would be extended if the court decided to grant a hearing on Van de Kamp’s appeal, an action that requires votes of four of the nine justices.

First Monday in October

The full court reconvenes Oct. 2 and is unlikely to act in the case before then.

The order requires the continued separate operations of Lucky, California’s largest market chain, and Alpha Beta, the fourth largest. Together, the two chains have 550 stores, which were to be operated under the Lucky name.

“Of course we’re pleased,” Ordin said. “ . . . I feel it does show that we have raised a very significant issue: whether the remedy of divestiture, keeping the two entities apart or being permitted to separate the two entities, is available.”

Alpha Beta’s parent, American Stores Co., bought Lucky in June, 1988.

American Stores says California customers will save $50 million to $60 million from the merger because of increased efficiency. But Van de Kamp, in a suit filed last September, contended that a decrease in competition would raise prices by $400 million a year.

Waited Too Long

U.S. District Judge David Kenyon of Los Angeles issued a preliminary injunction later that month ordering separate operation of the chains, finding a likelihood of reduced competition. The U.S. 9th Circuit Court of Appeals said this March that there was evidence to support Kenyon’s finding but overruled his injunction against the merger, saying Van de Kamp had waited too long to sue.

Kenyon then required Van de Kamp to post a $16.3-million bond in order to block the merger while appealing to the Supreme Court, saying the money was needed to cover American Stores’ losses from a delay of the merger.

Van de Kamp disputed the company’s claim of losses and argued that he should be exempt from the bond because he was suing on behalf of the state’s consumers. He said he would not continue with his appeal unless the bond was lifted.

The appeals court did not lift the bond requirement, however, in an order last Thursday that said the merger could proceed today. O’Connor’s action suspends that order until the high court disposes of the case.