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Ralphs

By MORRIS NEWMAN Contributing Reporter At what point does a grocery-store chain become a monopoly? That question is not academic to the Studio City Residents Association. In the view of the group, which claims membership of 2,000 households, the proposed merger between the parent companies of Ralphs and Hughes Market crosses the line from mere dominance of the market into near monopoly. The group wants state Attorney General Dan Lungren, among other public officials, to look into the matter and apparently, its lobbying efforts have had some effect. A spokeswoman for the attorney general confirmed that officials are studying the proposed merger as a result of public complaints. In a Dec. 8 letter to Lungren, association President Tony Lucente wrote that the proposed merger of Ralphs parent Yucaipa Cos. and Hughes parent Quality Foods would “give Ralphs a virtual monopoly in Studio City, thereby severely reducing competition to the great disadvantage of Studio City residents.” He noted that a Ralphs store currently operates on Ventura Boulevard at Laurel Canyon Boulevard, while at Ventura Boulevard and Coldwater Canyon Avenue is a Hughes Market that is expected to be converted to a Ralphs. Meanwhile, Ralphs has applied for a building permit for a new store at Ventura and Vineland Avenue. “These stores are located approximately one mile apart,” Lucente states in his letter. Lucente claimed that “alternatives to Ralphs supermarkets for Studio City grocery shoppers are currently limited to the Hughes market at Coldwater and Ventura, which will disappear if the merger is allowed to proceed.” There is a Gelson’s market just north of Studio City on Laurel Canyon, Lucente acknowledged in the letter, but “this upscale store with upscale prices only services the needs of a small segment of the community.” The only other competitor, Whole Foods Market at Coldwater and Riverside Drive, “also serves a small section of the community,” Lucente wrote. In addition to Lungren, copies of Lucente’s letter were sent to Joel Klein, U.S. assistant attorney general in the Justice Department’s antitrust division, and the Department of Consumer Affairs. A spokeswoman for Ralphs said company officials would not comment on the letter. California is one of the few states with its own antitrust statutes most antitrust issues are taken up by the U.S. Justice Department. But in 1992, the U.S. Supreme Court upheld the authority of the state attorney general to impose conditions, including the divestiture of certain assets, on companies undergoing mergers or acquisitions in California. Staci Turner, a spokeswoman for the attorney general’s office in Sacramento, said she “can’t comment on any one specific letter.” However, she acknowledged that “we are looking at the Ralphs and Hughes mergers. There has been a lot of public response on this issue.” Meanwhile, the residents association will continue to work against the merger, according to Lucente. “We will go through a series of actions to continue to press this issue,” Lucente said, vowing to contact members of the state’s congressional delegation. “Everybody eats and everybody buys groceries. That is why it is appropriate for us to represent residents in our community,” he said. The U.S. assistant attorney general could not be reached for comment. An antitrust expert, however, said that the Studio City residents might get a sympathetic ear from authorities on both state and federal levels. Antitrust regulators increasingly examine monopoly issues on a neighborhood-by-neighborhood basis meaning they are likely to take resident complaints seriously, according to William S. Grimes, chief counsel for the Congressional Subcommittee on Monopolies from 1980 to 1988, and now a professor at Southwestern School of Law. The trend in antitrust regulation, Grimes said, is not to forbid the merger outright in the event of problems, but to require the chains to spin off or divest stores in certain areas where competition appears lacking. “Personally, I am happy to see the Studio City residents speak out about this,” Grimes said. “I was thinking about organizing a group of Glendale residents on the same issue.”

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