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Executive Summary

AMERICAN STORES WILL SELL 161 SUPERMARKETS IN CALIFORNIA under a May 16 consent agreement with the state attorney general's office. The stores to be divested will include approximately 152 stores from American's Alpha Beta food and drug chain in southern California and nine stores from its subsidiary Lucky Stores. The agreement resolves a legal battle over antitrust concerns waged between American and the state since 1988 when American purchased Lucky Stores, Inc., then California's largest supermarket chain. The issue went as far as the U.S. Supreme Court at one point ("The Pink Sheet" Aug. 28, 1989, T&G-13). In addition to agreeing to divest the stores, American Stores will pay$550,000 towards the legal costs of the California attorney general's office. "American and Lucky have not admitted any violation of law or that there is any basis to the claims of the California attorney general," American said in a press statement. However, "with a view to ending the litigation," the firm "has agreed, within five years, to dispose of virtually all of its remaining Alpha Beta Company stores located in southern California." The settlement allows American to integrate 23 remaining southern California Alpha Beta shops into the Lucky chain. The company already has integrated Alpha Betas in the northern part of the state into Lucky operations. American Stores' last remaining hurdle is a consent decree with the Federal Trade Commission entered into at the time of the Lucky Stores acquisition. The FTC agreement would have allowed the Lucky/Alpha Beta merger but limited American's future ability to acquire existing supermarkets in some areas of California. Now that the Lucky/Alpha Beta merger has been partially dismantled, American is seeking to have the decree dissolved. American's consent decree with the state puts no restrictions on the company's future growth and operations in the California after the current divestiture.

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