Iowa Retailer Sues Supervalu, C&S

ELLIOT ZWIEBACH

MADISON, Wis. — Gary's Foods, a single-store operator in Mount Vernon, Iowa, has filed a complaint in U.S. District Court here alleging that Supervalu and C&S Wholesale Grocers engaged in a conspiracy to allocate territories, causing prices for goods and services to escalate.

The complaint seeks to become a class action whose potential members could number "thousands" and asks for a jury trial.

According to the complaint, after Minneapolis-based Supervalu began competing in New England in 1994 and Keene, N.H.-based C&S was on the verge of buying former Fleming assets in the Midwest in 2003, the wholesalers "entered a conspiracy to allocate markets and refrain from competing."

However, while they referred to the agreement as an asset swap, the complaint says that is a misnomer "[because] rather than swapping assets, each company closed three facilities in the others' operating area and terminated more than 1,000 employees at each one."

The result was that retailers had to pay higher prices, the suit alleges, and by closing the facilities, "the co-conspirators increased transportation fees for a number of retailers" and deliberately limited the extent to which manufacturer promotions were passed through.

A Supervalu spokeswoman said the company does not comment on the specifics of pending legal matters, although she noted that Supervalu is aware of the complaint, believes it is without merit and will vigorously defend against its allegations. A spokesman for C&S could not be reached for comment.

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