Supermarket chain Haggen has filed a lawsuit against rival chain Albertsons, seeking $1 billion in damages, Business Insider reports. When Albertsons engaged in a high-profile merger with Safeway, the Federal Trade Commission required the chains to sell off a combined 146 stores to alleviate antitrust concerns. They sold those stores, which are located in five different states, to Haggen. The transaction seemed like a win-win — Haggen was able to enter new markets, and Albertsons and Safeway were able to proceed with the merger.
But, since the sale, the 146 stores have been struggling. Haggen says it has been forced to “close about a fifth of the stores it had acquired,” alleging that this wide scale failure was orchestrated by Albertsons. For example, Haggen alleges that Albertsons manipulated the stores’ inventory on the eve of sale by intentionally understocking popular products and overstocking perishable goods. By sabotaging the stores, Haggen alleges, Albertsons is attempting to eliminate competition to the Albertsons/Safeway stores.
Albertsons maintains that the allegations are baseless, and it has filed its own lawsuit against Haggen, alleging that Haggen failed to pay for $40 million in inventory, Supermarket News reports.
These cases underscore the importance of good faith on one hand and due diligence on the other. Contracting with a direct competitor amplifies the potential for conflict, so make sure that you meet your obligations to deal fairly. And, just as importantly, exercise heightened diligence and protect yourself, just in case the other party does not play by the rules.