Haggen sued Albertsons for allegedly engaging in “coordinated and systematic efforts” to eliminate Haggen as a viable competitor in five states.
The Bellingham-based grocery chain filed a lawsuit for $1 billion in damages on Tuesday, Sept. 1. The suit alleges that Albertsons made “false representations” to Haggen and the FTC in its deal to sell stores to Haggen.
The deteriorating back and forth between Haggen and Albertsons started last year when Albertson’s offered Haggen 146 locations in Washington, Oregon, Nevada, California and Arizona. The Federal Trade Commission’s Bureau of Competition forced Albertson’s to sell the 146 stores as part of its merger with Safeway.
Haggen bought the stores in December 2014, expanding its operations from 18 stores in Oregon and Washington to 164 in five West Coast states.
Haggen began converting the store in February. In July, Albertson’s sued Haggen for fraud, alleging that Haggen failed to pay $41 million for inventory it acquired with the new stores.
In Haggen’s lawsuit, the grocery chain alleged that Albertsons used information from Haggen’s conversion schedule to plan aggressive marketing campaigns to undermine Haggen grand openings.
Prior to the store conversions, many of which were completed in less than two days, Albertsons deliberately understocked certain inventory at Haggen-acquired stores, resulting in some items being out of stock at grand openings, and deliberately overstocked some perishable goods causing “significant amount of inventory” that Haggen paid for to go to waste, according to the lawsuit.
Haggen also alleged that Albertsons provided “false, misleading and incomplete retail pricing data, causing Haggen stores to unknowingly inflate prices,” removed store fixtures and inventor from Haggen-acquired stores, diverted Haggen inventory to Albertsons stores, and failed to perform routine maintenance on stores and equipment.
Haggen filed the lawsuit just weeks after announcing plans to close 27 stores. The suit said 26 of those closures were forced by Albertsons sabotage efforts.
A press release from Haggen summarized the store’s allegations agains Albertsons. According to Haggen, Albertsons impeded their store conversion process by:
– 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.