Ninth Circuit Gives Supermarkets Coupon For Second Bite At The Antitrust Apple

California’s largest supermarkets will have another chance to argue that actions they took in response to a labor strike did not violate antitrust laws.  This second bite at the apple comes courtesy of the Ninth Circuit which, on February 11, granted an en banc hearing to reconsider the initial panel’s decision against the supermarkets.

In the case, California sued the state’s three largest supermarkets: Safeway and its Von’s business, Albertsons, and Kroger’s Ralphs and Food 4 Less businesses.  The state charged that the supermarkets violated antitrust law. 

According to California, the supermarkets illegally agreed to split profits in the face of an impending strike that would affect the companies.  Under their “Mutual Strike Assistance Agreement,” the supermarkets agreed to allocate profits to each other during the strike according to a formula that reflected their historical market shares.  California asserted, and the initial Ninth Circuit agreed, that this conduct violated Section 1 of the Sherman Act, which prohibits conspiracies that restrain trade.  The supermarkets argued that labor law excused their agreement, which also enhanced competition.  The initial panel reversed the district court, which had denied both parties’ motions for summary judgment.

The case is California v. Safeway, Inc., No. 08-55671, D.C. No. 2:04-cv-00687, and the new en banc argument will take place the week of March 21, 2011 in San Francisco.