Ruling to Stall Merger of Lucky and Alpha Beta : 11th-Hour Action Does Not Mean High Court Will Review Antitrust Case

U.S. Supreme Court Justice Sandra Day O’Connor, in an 11th-hour action, on Monday ordered that American Stores continue to be blocked from merging its Alpha Beta and Lucky food chains until the full court considers an appeal by California Atty. Gen. John K. Van de Kamp.

As a result, it appears that American Stores will be forced to operate the two chains separately at least until early October, when the Supreme Court is expected to decide whether to review the antitrust case. The court reconvenes Oct. 2.

A brief order by O’Connor, who fields emergency requests on rulings from the U.S. 9th Circuit Court of Appeals, omitted mention of a $16.3-million bond that a federal judge earlier had ordered Van de Kamp to pay if he wanted to pursue the case with the high court.

American Withholds Comment

“It’s my understanding that the order . . . is a stay without bond,” said Andrea Sheridan Ordin, chief assistant attorney general.

Van de Kamp had asked the high court to continue to block the merger without requiring a bond since his appeal was on behalf of California consumers. He said he would not pursue the case unless the bond were lifted.

Michael T. Miller, a senior vice president of American Stores, said the company would withhold comment on any options it might have until its attorneys scrutinize a written opinion that O’Connor is expected to issue in the next couple of days.

Monday’s order does not necessarily indicate that the court will choose to review the antitrust case, noted Kathy Arberg, a Supreme Court spokeswoman. About 5,000 petitions are filed with the court every term, she said, but only about 150 cases are granted a review.

String of Disappointments

Votes of four of the nine justices are required to approve a review. If they decide to consider the American Stores case, the ban against the merger will remain in place until the court makes a judgment, O’Connor’s order said.

The order was another in a string of disappointments for American Stores, which has been attempting for nearly a year to combine the two supermarket groups under the Lucky banner. The Salt Lake City company had hoped to win formal clearance for the merger this week from U.S. District Judge David Kenyon in Los Angeles.

In an order last week, the U.S. 9th Circuit Court lifted its prohibition against the merger as of Monday and returned the case to the U.S. District Court.

It was Kenyon who, last September, issued a preliminary injunction to halt the merger after he found a likelihood that it would reduce competition. In March, the U.S. 9th Circuit Court said there was evidence to support that finding, but it overruled the injunction, saying Van de Kamp had waited too long to sue.

Kenyon later imposed the bond requirement to cover any losses incurred by American Stores as a result of the delay.

Competition Cited

American Stores paid a hefty $2.5 billion for Lucky Stores in June, 1988, with the intention of merging the chains to save on advertising, distribution and other costs. Miller said the delay is costing about $1.5 million a week, not including legal expenses.

Van de Kamp belatedly challenged the Lucky-Alpha Beta merger last Sept. 1, contending that it would reduce competition and cost consumers millions of dollars a year in higher food bills.

American Stores has countered that it would pass along cost savings of $50 million to $60 million a year to customers.

Alpha Beta operates 212 stores and Lucky has 335 throughout California. The two had combined sales of about $8 billion in 1988. Sales for all of American Stores, which has a total of 1,911 stores in 40 states, are expected to reach $20 billion this year.