LAWSUIT SETTLED IN SAFEWAY MERGER

MICHAEL HARRISON

ANCHORAGE, Alaska -- A potential roadblock to the acquisition of Carr Gottstein Foods here by Safeway, Pleasanton, Calif., was lifted when the Alaska Public Interest Research Group settled a lawsuit against the companies.

The settlement includes the creation of a citizens advisory committee that will meet regularly with Safeway representatives for nearly a year after the proposed $330 million merger closes.

AKPIRG, a consumer advocacy group, and five Alaska residents filed a class-action suit in Superior Court here late last year to prevent the proposed merger. The complaint charged that if Safeway acquired the 49-store chain, which includes 24 conventional supermarkets, competition would be reduced to a level harmful to consumers.

Safeway currently operates 11 stores in Alaska.

However, the two companies have since filed a consent decree with the Alaska State Attorney General's Office that calls for Safeway to sell six stores in Alaska and for Carr Gottstein to sell one.

The decree stipulates that Safeway would pay the state $1 million for each store that is not divested within 10 months of the decree becoming official. The decree is now under review by the state court and the Federal Trade Commission.

According to Peter Gruenstein, an attorney who represented AKPIRG in the suit before it was dropped, the organization "is satisfied that its original goal of assuring that a public review be undertaken -- by both the state and the federal government -- has been met. AKPIRG therefore agrees not to oppose the proposed consent decree. Under the circumstances . . . the plaintiffs believe it is appropriate to enter into this settlement agreement with Safeway and Carrs."

A Safeway official said, "The settlement calls for the creation of a citizens advisory committee to provide Safeway with input and reactions from Alaskan consumers and shoppers during the 10 months immediately following the closing of the merger. The committee will meet monthly with a Safeway senior manager from the company's Alaskan operations, from the closing . . . until most of the supermarkets required to be divested by the consent decree have been sold."

The company declined to comment further. Car Gottstein officials could not be reached for comment.