Halt of Alpha Beta-Lucky Merger Is Appealed

American Stores of Irvine asked a federal appeals panel Thursday to overturn the decision of a lower court and allow the merger of the Alpha Beta and Lucky supermarket chains.

An attorney for American Stores, owner of both chains, told the appeals court that U.S. District Judge David V. Kenyon was wrong when he ruled in September that the merger would “substantially” harm California shoppers and ordered the chains to remain competitors until a trial can be held.

In Thursday’s court session, American asked the U.S. 9th Circuit Court of Appeals in Pasadena to dissolve Kenyon’s temporary injunction and to dismiss the state attorney general’s lawsuit objecting to the Lucky-Alpha Beta merger on antitrust grounds.

American bought Lucky’s 340 markets in California in June for $2.5 billion, making it the nation’s largest supermarket owner.

American’s attorney, Frank Rothman, told the appeals panel that Kenyon “clearly abused his discretion” and did not have the power to halt the merger.

Barring the merger “forces (American) to lose all control over” Lucky, American argued in court papers. Furthermore, “the injunction, especially if made permanent, would inevitably contribute to higher prices.”

Rothman further argued that the merger cannot be stopped permanently in any case. If a trial determines that the merger violated antitrust laws, Rothman told the appeals court, then the only available remedy is to bar American Stores from future violations of antitrust laws.

Those arguments were countered by Deputy Atty. Gen. Chester H. Horn Jr.

Horn told the appeals panel that if the merger violates antitrust laws, American could be ordered to sell the entire Lucky chain or be required to never merge Alpha Beta and Lucky into one chain. A third option would be to require Lucky to dispose of only those Lucky stores in areas where a merger would dramatically increase market concentration, Horn said.

Horn argued that to preserve the option of permanently keeping the chains separate, the court must keep the temporary order in place.

The panel is unlikely to decide the case before early January, attorneys said after Thursday’s arguments.