Arrow-right Camera
The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Haggen sues Albertsons for $1 billion, alleging sabotage

Angel Gonzalez Seattle Times

SEATTLE – Haggen is suing Albertsons for $1 billion, alleging the grocery giant hoodwinked the small supermarket chain into buying dozens of Western U.S. stores in order to facilitate a merger with Safeway and then sabotaged Haggen’s entry into the new markets.

The lawsuit, filed Tuesday in federal court in Delaware, accuses Albertsons of unfair competition that forced Haggen to lay off hundreds and close about a fifth of the stores it had acquired.

The move is the latest twist in Haggen’s fumbling bid to become a West Coast supermarket power. In early 2015, the Bellingham-based grocer, which previously operated solely in Washington and Oregon, announced with great fanfare that it would expand ninefold, expanding its presence in Washington and Oregon and entering new markets in California, Arizona and Nevada.

It did so by acquiring 146 stores that Albertsons and Safeway were required to jettison in order to win federal regulators’ approval of their merger. The former Safeway store in Liberty Lake was among them, becoming Haggen in June.

But the expansion soon faltered.

Many consumers complained about price hikes; in July, Haggen cut back on employee hours and laid off hundreds. Last month, Haggen said it would close or seek to sell at least 27 stores. Unions filed grievances and complained that Haggen had failed to live up to its promises to employees.

Haggen was also sued for $41.1 million by Albertsons, which claimed it hadn’t paid for inventory at some of the stores Haggen acquired.

In Tuesday’s lawsuit, Haggen says Albertsons used what it knew about the timing of store transitions to time ad campaigns and discounts in order to steal away customers to stores still bearing the Albertsons and Safeway brands.

Haggen also says Albertsons gave it misleading price information, resulting in the prices that turned off many customers as soon as the rebranded stores opened their doors.

“The practical result of this deception was a consumer walking into a brand new Haggen store and finding the same item on the same shelf, but now priced higher than it was immediately prior to store conversion,” the lawsuit says.

Moreover, Albertsons gave Haggen muddled inventory data, understocking some stores and overstocking others with perishable products, the lawsuit says.

Those practices damaged Haggen’s operations from the get-go, leading to store closures it had never intended to make, as well as a barrage of negative press, the suit says.

The result, Haggen says, is less competition and more power for Albertsons, violating the Federal Trade Commission’s intent when it ordered it to get rid of hundreds of stores.

“Had Haggen known Albertsons’ true intentions, Haggen would never have purchased the stores, nor would the FTC have permitted such a purchase,” the lawsuit says.

The lawsuit says Albertsons’ violations of antitrust laws entitle Haggen to triple damages of at least $1 billion, plus attorneys’ fees.