The Utah attorney general's office, along with attorneys general in several other states, is investigating Smith's Food & Drug Corp. and Nu Skin International.
Utah Attorney General Paul Van Dam confirmed the state's interest in Smith's recently, adding that several other Western states were also inquiring into the grocery chain's business practices.Farah Mahi, Van Dam's public information officer, confirmed the state's interest in NuSkin. The Deseret News contacted Mahi after the Chicago Tribune reported the Illinois attorney general, along with attorneys general in four other states, was investigating the skin-care company for illegal business practices.
Van Dam announced an investigation of Utah's grocery business in June 1990, shortly after Skaggs Alpha Beta closed its Utah grocery stores, selling and leasing seven of the stores to Smith's. At the time, Van Dam declined to name the companies being examined.
But after the Arizona attorney general revealed last month that it had been investigating Smith's for misleading advertising, Van Dam acknowledged that his office was looking at Smith's, too. He also said Utah has received inquiries from attorneys general in other states about Smith's.
Smith's agreed to alter the advertising claims Arizona objected to. "I don't know of any plans to make those changes in Utah," said Peter Barth, corporate counsel for Smith's.
Asked about other investigations, Barth said, "Smith's does receive inquiries from government agencies from time to time."
The company responds to the inquiries, he said, but added, "Our policy has been not to comment specifically about the particulars of these inquiries. We consider them to be confidential."
After the Arizona action, one particular is well-known: Smith's claim that it is the certified low-price leader.
"That's been a controversial issue," Van Dam said. "The question is: How valid is that claim? I know many of the Western states are looking at that. We are looking at that as well."
"In a highly competitive market, Smith's complies with all applicable laws and regulations in bringing its customers the lowest possible prices," Barth said.
Van Dam is also examining Smith's to see if it unfairly dominates Utah's grocery industry.
"We have to look at American Stores selling to Smith's and see if that creates a monopoly and what that does to the grocery market," he said. "Of course, you get all the players coming in with their attorneys to tell you why it's okay."
Nu Skin, the second company under investigation, is a Provo company that uses multilevel marketing to sell 60 skin-care products in the United States and Canada. The company, which expects $500 million in sales for 1991, has more than 100,000 distributors in the United States.