Albertsons Challenged in Court by Smaller Grocery Chain

“If Albertsons is successful in destroying Haggen as a viable competitor, Haggen’s damages, which include the lost prospective value of the acquisition, may exceeed $1 billion”, according to a federal lawsuit filed by Haggen Holdings LLC.

According to the lawsuit, after notifying regional Haggen executives about the faulty new pricing system, Sukiasian emailed Haggen Pacific Southwest CEO Bill Shaner. “Mr. Shaner acknowledged the email and told [Sukiasian] that she would be contacted by a Haggen’s support team”, says the complaint.

“The allegations are completely without merit, and we will vigorously defend ourselves in court”, the company said in a statement. The Seattle Times says that earlier this year Haggen bought 146 Albertsons and Safeway stores, expanding into California, Nevada and Arizona.

The two chains announced in March 2014 that they meant to merge. Albertsons and Safeway were forced to jettison those stores to win approval by the Federal Trade Commission for their merger.

The complaint also said Albertsons made false representations to both the FTC and Haggen about the commitment by Albertsons to a transformation in a seamless merger of the stores into viable competitors under the banner of Haggen.

Haggen has charged that Albertsons carried out many illegal actions that included using confidential information regarding scheduling to market against Haggen, providing false data on prices, deliberate overstocking as well as under stocking of certain items and failing to carrying out routine maintenance prior to the conversion.

“Albertsons’ anti-competitive conduct caused significant damage to Haggen’s image, brand and ability to build goodwill during its grand openings to the public”, the complaint states. “Haggen never meant to close any of the stores it acquired”.

Haggen has opened seven stores in Southern Nevada in recent months. Haggen has struggled with the massive expansion from the start, facing criticism for offering the same product at higher prices and attracting negative attention with an error that caused almost 1,000 products to be significantly overpriced at some California locations.

It also claims Albertsons removed store fixtures and inventory from Haggen-acquired stores that Haggen paid for and deliberately overstocked perishable inventory at Haggen stores beyond levels consistent with the ordinary course of business.

“The divesture of stores to Haggen followed the process determined by the Federal Trade Commission (FTC) order. From the outset, Albertsons has satisfied its obligations and worked to ensure the success of the transition of the divested stores to Haggen and several other companies”.

The lawsuit outlines how Haggen executives met with Albertsons counterparts at that company’s headquarters in Boise, Idaho, last November.