Albertsons to pay Haggen $5.75M to settle billion-dollar lawsuit

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Grocery chain Albertsons Co. has reached settlement with the Pacific Northwest grocer Haggen Holdings LLC over the sale of 146 stores that eventually led Haggen into bankruptcy.

According to a document filed with the U.S. Securities and Exchange Commission on Jan 22, Albertsons has agreed to pay $5.75 million in cash to a trust formed by the creditor committee sorting through Haggen's bankruptcy.

The filing also said Albertsons agreed to transfer its unsecured claim of $8.25 million to Haggen's other creditors in the bankruptcy.

The agreement was made to settle a lawsuit filed by Haggen in September 2015, claiming up to $1 billion in damages from the sale of Albertsons stores to Haggen. According to Bellingham Herald, the Bellingham grocer claimed that 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."

Haggen purchased 146 stores from Albertsons in early 2015 when the Idaho-based grocery giant merged with Safeway. The purchase aimed to help satisfy a Federal Trade Commission requirement that Albertsons and Safeway shed some stores before they merge.

According to the Wall Street Journal, Haggen weighed in at fewer than 20 stores and operated profitably in the Pacific Northwest when the acquiring occured. But the company failed in the purchased stores in the West Coast and into the Southwest.

Haggen sued Albertsons as the sales at the stores plummeted, and it blamed the problems that afflicted the acquired stores on alleged anticompetitive tactics by Albertsons. A few days after filing the lawsuit, Haggen filed for bankruptcy.

Albertsons denied wrongdoing, saying Haggen's claims "lacked any merit." But the grocery chain said, "the settlement enables us to avoid costly litigation." Albertsons said the company is pleased to put the matter behind and it will continue to focus on their stores.

Albertsons also sued Haggen for about $41 million for unpaid inventory. Albertsons spokesperson Brian Dowling said the inventory lawsuit would be dismissed if the settlement is agreed. The last week settlement is still subject to the bankruptcy court approval.

Haggen is now focusing on its Chapter 11 bankruptcy case. The company has sold off many of its stores, and Albertsons acquired 31 of Haggen's stores at the bankruptcy auction.

Haggen is scheduled to auction off its 33 remaining core stores on Feb 5. The auction is expected to draw plenty of interest from investors and other grocery companies because the remaining stores are considered profitable.

Tags
Lawsuit, Federal Trade Commission, Bankruptcy
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