September 01, 2015
Haggen, a West Coast regional grocer, has filed a lawsuit against Albertsons LLC and Albertsons Holdings LLC seeking more than $1 billion in damages.
Among its complaints, Haggen claims that Albertsons illegally accessed Haggen’s confidential data to gain an unfair competitive advantage.
The complaint, which was filed Sept. 1 in United States District Court for the District of Delaware, alleged that following Haggen’s December 2014 purchase of 146 Albertsons and Safeway stores, Albertsons engaged in “coordinated and systematic efforts to eliminate competition and Haggen as a viable competitor in over 130 local grocery markets in five states,” and “made false representations to both Haggen and the FTC about Albertsons’ commitment to a seamless transformation of the stores into viable competitors under the Haggen banner.”
Albertsons sought out Haggen in order to convince the Federal Trade Commission that Haggen would be a new competitor in local markets, which enabled Albertsons to gain the FTC’s approval of a merger between Albertsons and Safeway — a merger that created “one of the largest food retailers in the United States, with over 2,200 stores and $61 billion in combined sales,” according to the complaint.
Despite the FTC’s orders and Albertsons’ agreement to abide by all conditions of the sale, the complaint alleges, Albertsons engaged in an illegal campaign against Haggen.
In particular, Haggen alleged in its complaint that Albertsons, in violation of numerous laws, the FTC order and the purchase agreement, intentionally and deliberately undertook a number of “malicious and unfair actions” that “strained Haggen’s resources” and “created substantial distraction and diverted the attention of store-level and senior Haggen management” during the store conversion process, such as:
** Using proprietary and confidential conversion scheduling information to plan and execute aggressive marketing campaigns intended to undermine Haggen grand openings;
** Providing Haggen with false, misleading and incomplete retail pricing data, causing Haggen stores to unknowingly inflate prices;
** Cutting off Haggen-acquired store advertising in order to decrease customer traffic;
** Timing the remodeling and rebranding of its retained stores to impair Haggen’s entry into the relevant markets;
** Diverting customers by illegally accessing Haggen’s confidential data to gain an unfair competitive advantage;
** Deliberately understocking certain inventory at Haggen-acquired stores below levels consistent with the ordinary course of business just prior to conversion, resulting in out of stocks which negatively impacted the shopping experience upon Haggen grand openings;
** Deliberately overstocking perishable inventory at Haggen-acquired stores beyond levels consistent with the ordinary course of business just prior to conversion such that Haggen had to throw away significant amounts of inventory it paid for;
** Removing store fixtures and inventory from Haggen-acquired stores that Haggen paid for;
Diverting Haggen inventory to Albertsons stores;
** Failing to perform routine maintenance on stores and equipment.
“Albertson’s anti-competitive conduct caused significant damage to Haggen’s image, brand, and ability to build goodwill during its grand openings to the public,” according to the complaint.
The complaint continued, “Albertson’s unlawful acts destroyed or substantially lessened the economic viability, marketability and competitiveness of the [Haggen] stores, depriving consumers in each of the relevant markets the benefits of substantial competition from a new market entrant.”