Lucky, Alpha Beta Deal Going Before Supreme Court

The California attorney general’s antitrust challenge of the $2.5-billion merger of Lucky and Alpha Beta supermarkets goes before the U.S. Supreme Court this week, officials said.

Since the deal was announced in May, 1988, Atty. Gen. John K. Van de Kamp has succeeded in stalling the merger, arguing that it would reduce competition and cost consumers $400 million in higher prices.

“Every business owner knows the fundamental rule of pricing: as long as there is competition, you can’t overprice your products or consumers will simply shop somewhere else,” Van de Kamp said.

American Stores Co., the Salt Lake City firm that owns the two chains, has responded that it would adopt Lucky’s low-cost policy at its Alpha Beta stores and actually save shoppers money.

American Stores has been forced by court order to operate the chains separately while the Supreme Court reviews the case.

The case goes to the Supreme Court on Tuesday.

The case began in March, 1988, when American launched a hostile takeover of Lucky, the state’s largest grocery chain with 340 stores. After weeks of maneuvering, Lucky agreed to be acquired in May.

Despite Van de Kamp’s opposition, the Federal Trade Commission approved the merger Aug. 31, 1988, after American agreed to sell 37 stores in areas where it would have had too great a share of the market.

Van de Kamp sued the next day and won a preliminary injunction blocking American from combining the two chains from U.S. District Judge David Kenyon in Los Angeles one week later.

The 9th U.S. Circuit Court of Appeal reversed Kenyon’s decision March 31, 1989. The court agreed that the merger probably violated antitrust law, but said Van de Kamp did not have the authority to force a company to divest of assets.