Haggen filed lawsuit against Albertsons LLC and Albertsons Holdings LLC seeking more than $1 billion in damages

Complaint Alleges Albertsons Engaged in Coordinated and Systematic Efforts to Eliminate Competition in Violation of Federal Trade Commission Orders and Various Federal and State Laws

Bellingham, Wash., 2015-9-4 — /EPR Retail News/ — Haggen, the West Coast regional grocer, today announced that the company has filed a lawsuit against Albertsons LLC and Albertsons Holdings LLC (“Albertsons”) seeking more than $1 billion in damages.

The complaint, which was filed today 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 (“FTC”) 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 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, despite Haggen’s plans to successfully operate and expand upon the acquired stores, Haggen 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,” the complaint said. “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, “[and] have caused significant harm to competition, local communities, employees and consumers,” throughout California, Oregon, Washington, Nevada and Arizona.  Instead of focusing on succeeding in the new markets, according to the complaint, “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; and
  • 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.”

About Haggen
Founded in 1933 in Bellingham, Washington, Haggen has built its business on providing guests the freshest and most local products with genuine service, while supporting the communities it serves. In the first half of 2015, Haggen made an acquisition expanding from a Pacific Northwest company with locations in Oregon and Washington to a regional grocery chain with locations in Washington, Oregon, California, Nevada and Arizona. Throughout its eight decades in business, the company has supported regional farms, ranches, fisheries and other businesses, creating a lasting and sustainable local food economy. The company remains focused on its core values as it expands. For more information about what’s happening at Haggen, visit haggen.com, and get social with Haggen Northwest Fresh at Facebook, Twitter and Instagram; and Haggen Southwest at Facebook, Twitter, and Instagram.

Media Contact

Deborah Pleva
deb@weinsteinpr.com
(503) 908-4250

Haggen begins the process of acquiring 146 stores as a result of Albertsons LLC and Safeway merger

Pacific NW grocery chain takes ownership of first acquired store at 12:01 a.m. Thursday morning

Bellingham, Wash., 2015-2-13 — /EPR Retail News/ — Pacific Northwest grocery chain Haggen today announced that it has begun the process of acquiring 146 stores as part of the divestment process brought about by the Federal Trade Commission’s (FTC) review of the Albertsons LLC and Safeway merger. The FTC approved the divesture on Tuesday, January 27, 2015, and the merger of Albertsons and Safeway Inc. was completed on Friday, January 30, 2015. Haggen will take ownership of the first Albertsons store in Monroe, Washington, at 12:01 a.m. Thursday morning.

With this acquisition, Haggen will expand from 18 stores with 16 pharmacies to 164 stores with 106 pharmacies; from 2,000 employees to more than 10,000 employees; and from a Pacific Northwest company with locations in Oregon and Washington to a major regional grocery chain with locations in Washington, Oregon, California, Nevada and Arizona.

“This momentous acquisition is a once-in-a-lifetime opportunity to rapidly expand the Haggen brand across the West Coast,” said John Caple, chairman of the Haggen board of directors and partner at Comvest Partners, a private investment firm that owns the majority share of Haggen. “Now that the deal has closed, our team is focused on seamlessly converting these 146 stores to the Haggen brand over the next five months.”

The Haggen team, led by John Clougher, CEO, Haggen Pacific Northwest, and Bill Shaner, CEO, Haggen Pacific Southwest, has outlined its plans to convert the stores. Under the settlement, the divestitures to Haggen must be completed within 120 days from the purchase of the first store.

Haggen will convert the stores moving from north to south, with a few exceptions. The first conversion begins on Thursday at the former Albertsons located at 19881 SR 2, Monroe, WA. Soon after, another 18 stores in Washington will be converted during February and March, with the final seven Washington stores scheduled in June. The 83 stores in California will be converted from March to May. The 20 Oregon stores will transfer to the Haggen brand throughout the months of March, April and May. The Nevada and Arizona stores will be the last to convert in the late spring. Each week, between one and 12 stores will be converted.

As the stores are transformed into the Haggen brand from the Albertsons, Safeway, Pavilions or Vons brands, each store’s employees will be invited to become Haggen employees. “Retaining the existing store employees was an essential part of the acquisition and we hope they all accept our invitation to join the Haggen family. These are great teams and these new employees will be an incredible asset to our growing company. Plus, these familiar faces will help ease the brand transition for long-time customers,” said Bill Shaner.

The amount of time it will take for a conversion will vary store by store. Some stores can be converted within two days after the change of ownership, while others will take longer. Both interior and exterior signage will change at all locations. John Clougher said, “We’re excited about the changes we’re making to enhance these stores, and we’re confident customers will like the new look, the new offerings, and their new full service grocery destination.”

Shaner noted how the store offering will change. “Haggen has built its 81-year-old business on providing excellent, locally sourced, fresh produce and high quality meats and seafood. That focus will definitely be reflected in the new stores,” he said.

As a full-line grocery store, Haggen will offer a core assortment that meets the needs of regular shoppers. Plus, they will supplement that selection with products that are locally relevant. “Haggen is still small enough to be very nimble and responsive to each store’s customers. What you find in a Bellingham store will differ from what you’ll find in a store in San Diego. Being locally focused is a core value of Haggen,” said Shaner.

The acquisition of the 146 stores by Haggen has been well supported by grocery industry partners. “We are incredibly grateful for key partners that have helped to make this acquisition a reality, including Unified Grocers, SUPERVALU and Charlie’s Produce,” noted Clougher. Unified Grocers will be the primary supplier in the Pacific Southwest and a secondary supplier in the Pacific Northwest. SUPERVALU will be the primary supplier in the Pacific Northwest. Charlie’s Produce will be the primary and preferred supplier for produce for all Haggen stores. Haggen plans to announce many regional and local distributors in the coming months.

Additionally, Starbucks and Haggen have agreed to continue operating the 78 Starbucks stores located in Haggen’s acquired properties, with remodeling planned for these existing cafés. Haggen will also be adding cafés to other locations. Clougher said, “We are proud to be continuing and expanding our partnership with Starbucks – another great Washington company committed to building stronger communities.”

Clougher added, “With the help of both our long-standing and new partners and employees, we are excited to offer our locally sourced produce and groceries, genuine service, and homemade quality to customers throughout Washington and Oregon and now in California, Nevada and Arizona.”

About Haggen
Founded in 1933 in Bellingham, Washington, Haggen has built its business on providing guests the freshest and most local products with genuine service, while supporting the communities it serves. The company currently operates stores in Washington and Oregon, and is in the process of acquiring an additional 146 stores. With this acquisition, Haggen will expand from 18 stores with 16 pharmacies to 164 stores with 106 pharmacies; from 2,000 employees to more than 10,000 employees; and from a Pacific Northwest company with locations in Oregon and Washington to a major regional grocery chain with locations in Washington, Oregon, California, Nevada and Arizona. Throughout its eight decades in business, the company has supported regional farms, ranches, fisheries and other businesses, creating a lasting and sustainable local food economy. The company remains focused on building local, sustainable food economies as it expands. For more information about what’s happening at Haggen, visit haggen.com.

Media Contact
Deborah Pleva
deb@weinsteinpr.com
(503) 250-4750