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American Stores Co. has three options in the wake of the U.S. Supreme Court's sharp blow to the company's proposed merger of its Lucky and Alpha Beta supermarkets in Southern California: lengthy litigation, tough negotiations or the sale of one or both of the grocery chains.

By a 9-0 vote, the high court on Monday reversed a federal appeals ruling against California Attorney General John Van de Kamp and reinstated his antitrust lawsuit against American Stores' planned consolidation of Alpha Beta and Lucky.In 1988, American Stores, the Salt Lake City-based owner of Alpha Beta, borrowed $2.5 billion to buy Lucky, based in Dublin. But a challenge by Van de Kamp blocked the deal. As a result, American Stores has been running the two chains separately at great expense due to lost efficiencies from integration.

The Supreme Court ruling affects American Stores' 175 Alpha Betas, all in Southern California, as well as its 185 Lucky stores in that part of the state.

But it does not affect 198 Lucky stores in Northern California, including 29 that used to be Alpha Beta stores, according to the attorney general's office and American Stores. Under a partial settlement last year, American Stores was allowed to convert those sites into Lucky stores in February, providing that it sold about 13 supermarkets with combined weekly sales of $2.1 million.

"This is a tremendous victory both for California grocery shoppers and for state officials willing to challenge unlawful mergers," Van de Kamp said in a statement.

American Stores said the ruling was disappointing. It found a glimmer of hope in the fact that the high court left open the company's contention that Van de Kamp waited too long to file his lawsuit.

The decision also disappointed Wall Street, where American Stores shares closed down 1 at 63 on the New York Stock Exchange.

American Stores spokesman Troy D'Ambrosio identified three possible courses of action that the company could pursue:

- It could go back to the U.S. district court in Los Angeles for a trial on Van de Kamp's allegations that the combination would violate antitrust laws by limiting competition and raising consumer prices in the markets affected.

But litigation in the trial court would likely take months, and appeals could add years, said Christopher O.B. Wright, a Los Angeles antitrust expert who has followed the case closely.

"Unless there's a settlement here in Southern California, there's going to be a lot of uncertainty for American Stores." Besides, he added, the district judge in the case, David Kenyon, has previously said Van de Kamp has a strong case.

Meanwhile, as Alpha Beta is operated separately, it is suffering because it is not receiving the store upkeep it needs and its pricing policy is not competitive, said analyst John Kosecoff of First Manhattan Co. in New York. "Alpha Beta's ultimate fate is uncertain, as American Stores is unable or unwilling to commit the necessary funds to rejuvenate it," he said.

- The company could negotiate a settlement of the remainder of the case with Van de Kamp. "The opportunity to settle it would be welcome if it can be done in the interests of consumers," said special assistant attorney general Mark Strumwasser.

But Strumwasser and securities analysts say that with the Supreme Court victory, Van De Kamp is in a strong position to extract concessions, including requiring American Stores to sell stores in areas where it would otherwise hold a particularly large market share.

- There is wide speculation that American Stores, which has been making a lot of deals in recent years, might resolve the legal problem by selling Alpha Beta or Lucky, Kosecoff said.

But analyst Jonathan Ziegler of Montgomery Securities in San Francisco said, "I'm willing to bet they don't sell Lucky."

American Stores earned $118.1 million ($3.45 a share) on sales of $22 billion in the 53-week fiscal year ended Feb. 3. It said it would have earned about $45 million ($1.30 a share) more if Alpha Beta and Lucky had been integrated.