The Supreme Court ruled 9-0 Monday that a federal judge had the power to order two supermarket chains in California to operate separately until an antitrust case against their merger was settled.
The court's action, in a decision by Justice John Paul Stevens, is a victory for state officials who argued the merger of American Stores and Lucky Stores would cost consumers $400 million more a year in grocery bills.American Stores officials dispute the state's findings. "That's a figure we think is in error. We have actually said it would save consumers $50 to $60 million a year," said company spokesman Troy D'Ambrosio Monday morning.
The court noted, however, that the state of California's delay in originally bringing the suit against the merger could eventually protect the merger. But Stevens said that question was not before the court.
"We are merely confronted with the naked question whether the district court had the power to divest American of any part of its ownership interests in the acquired Lucky Stores, either by forbidding the exercise of the owner's normal right to integrate the operations of the two previously separate companies, or by requiring it to sell certain assets located in California."
Stevens said that such a "remedy" was within the power of the court under the meaning of antitrust laws.
American Stores, which operates 252 Alpha Beta and Skaggs Alpha Beta stores in California with headquarters in Salt Lake City, purchased Lucky's 550-store chain in June 1988 for $2.5 billion at a cost of $65 a share.
Lucky Stores is based in Dublin, Calif., 40 miles east of San Francisco.
The merger with Alpha Beta, California's fourth largest supermarket chain, would give American Stores about 27 percent of the supermarket business in California and would make American Stores owner of the largest supermarket chain in the country.
American Stores in December closed all eight of its Utah grocery stores. Seven of the affected stores have been leased by Smith's Food and Drug Center and the eighth, located in Centerville, was taken over by Albertson's.
American Stores' Osco Drug operations in Utah were not affected by the grocery store merger, D'Ambrosio said. "It only affected grocery stores in California. Also, the $400 million figure quoted by the state attorney general is isolated to California and its food stores only."