Haggen Accuses Albertsons of Cutthroat Practices in $1 Billion Suit

Haggen, the beleaguered grocery chain forced to close stores throughout the region within months of opening, accused Albertsons of malicious business practices Tuesday in a $1 billion lawsuit.

The suit is the latest front in the battle between the two competitors that exposes how cutthroat the industry is as several major chains struggle to survive in Southern California.

Until this year, Hagen was a small northwest chain, but it expanded from 18 stores and about 2,000 employees to 164 stores and more than 10,000 people in five states by acquiring stores Albertson’s and Safeway shed when they merged.

“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,” the suit alleges. “Albertson’s anti-competitive actions critically damaged the operations, customer service, brand goodwill and profitability of the divested stores from the outset... [and] have caused significant harm to competition, local communities, employees and consumers.”

Albertsons could not be reached for comment Tuesday, but a spokesperson told the Los Angeles Times the allegations “are completely without merit.”

Albertsons sued Haggen in July, alleging the company failed to pay millions it owed when it acquired Albertsons’ stores and inventory.

Less than a year after opening in Los Angeles and Counties, Haggen, announced plans to close down 27 locations including stores.

During the expansion, many industry analysts questioned if it was too much too fast. Shoppers balked at the selection and prices. Billed as a high quality chain with discount prices, Haggen stoked anticipation. However, many shoppers didn’t find the prices particularly competitive.

Haggen blames Albertsons for that.

Among the allegations lobbed at Albertson in the suit:

• 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;
• 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.