Haggen sues Albertsons for more than $1 billion in damages
– Haggen has filed a lawsuit against Albertsons seeking more than $1 billion in damages related to Haggen’s purchase of Albertson’s stores.
The complaint, which was filed Tuesday in United States District Court for the District of Delaware, alleges that following Haggen’s December 2014 purchase of 146 Albertsons and Safeway stores, including six stores in San Luis Obispo County, 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 Federal Trade Commission about Albertsons’ commitment to a seamless transformation of the stores into viable competitors under the Haggen banner.”
According to the complaint, Albertsons engaged in an illegal campaign against Haggen including “premeditated acts of unfair and anti-competitive conduct that were calculated to circumvent Albertsons obligations under federal antitrust laws, FTC orders, and contractual commitments to Haggen, all of which were intended to prevent and delay the successful entry of Haggen (or any other viable competitor) into local grocery markets that Albertsons now dominates.”
“During the transfer process, Albertsons launched its plan to gain market power and/or monopoly power, acting in a manner that was designed to (and did) hamstring Haggen’s ability to successfully operate the Stores after taking ownership,” according to the complaint.
As a result, Haggen said that it was “forced to close 26 of the Stores that it newly acquired as a part of the Albertsons’ divestiture, and faces the potential closure of additional stores.”
“Albertson’s anti-competitive actions critically damaged the operations, customer service, brand goodwill and profitability of the divested stores from the outset,” the complaint alleged. Instead of focusing on succeeding in the new markets, the complaint says, “Haggen has had to focus on strategies to recover from Albertsons’ wrongful acts, which include, sadly, Haggen’s efforts to find new jobs for displaced employees who too are victims of Albertsons’ actions.”
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
In an email response, Brian Dowling, vice president of public affairs at Albertsons, said the allegations in the lawsuit “are completely without merit,” according to the Bellingham Herald.
In July, Albertsons filed a lawsuit against Haggen, accusing the grocer of fraud in failing to pay more than $36 million as part of the sale of 146 grocery stores. According to that lawsuit, Albertsons says that Haggen refused to pay for $36 million of inventory at 32 stores it acquired.