What Haggen’s lawsuit against Albertsons means for the grocery chain’s problems

Haggen Food & Pharmacy stores are to experience layoffs and cutbacks including this location on Diamond Bar Boulevard in Diamond Bar, Calif. July 24, 2015. (Photo by Leo Jarzomb/San Gabriel Valley Tribune) 

Haggen’s entry into Southern California’s grocery industry has widely been viewed as a failure.

Earlier this year, the Bellingham, Wash-based supermarket chain acquired 146 stores that previously had operated as Vons or Albertsons. But shortly thereafter, the company began cutting employee hours and laying off workers. Supermarkets that had been bustling in their previous incarnation were now virtually empty. Prices were high, shoppers said, and advertising appeared to be minimal.

Haggen’s rapid expansion from 18 stores to 164 locations appeared to be imploding — rapidly.

HAGGEN’S LAWSUIT AGAINST ALBERTSONS

But things changed Tuesday when Haggen filed a lawsuit against Albertsons that accuses the company of “coordinated and systematic efforts” to sabotage its expansion in five states by engaging in “an illegal campaign” against Haggen including “premeditated acts of unfair and anti-competitive conduct.”

The lawsuit alleges Albertsons provided Haggen with “false, misleading and incomplete retail pricing data, causing Haggen stores to unknowingly inflate prices.” The action additionally claims that Albertsons diverted customers from Haggen stores by illegally accessing Haggen’s confidential data to gain an unfair competitive advantage.

Albertsons released a brief statement on Tuesday that said the allegations were “without merit.”

But the company expanded that statement on Wednesday.

ALBERTSONS’ RESPONSE

“The allegations contained in the Haggen complaint are completely without merit and we will vigorously defend ourselves in court,” Albertsons said. “Albertsons has not engaged in anti-competitive or inappropriate practices as alleged by Haggen. The divesture of stores to Haggen followed the process determined by the Federal Trade Commission (FTC) order.”

Albertsons said it has satisfied its obligations and worked to ensure the success of the transition of the divested stores to Haggen and several other companies.

“Recently, Albertsons was forced to sue Haggen for an amount in excess of $40 million for unpaid inventory,” statement added. “Rather than paying the amounts owing, Haggen responded by filing this lawsuit against us in an attempt to deflect attention from their failure to comply with basic contractual obligations.”

As with any lawsuit, the allegations have yet to be proven. But they do raise the possibility that Haggen’s wounds might not necessarily be self-inflicted.