Three California supermarket chains must face an antitrust lawsuit over an agreement in 2003 to share profit in case any of the three was singled out for a strike, a U.S. appeals court ruled.

The court in San Francisco overturned a lower court ruling that the agreement, reached during a conflict with the companies’ unions, didn’t violate antitrust law. The appellate panel’s 2-to-1 ruling rejected the argument by Ralphs Grocery, Albertson’s and Vons that the agreement wasn’t anticompetitive because it lowered prices for consumers by reducing labor costs.

“It is a primary object of our nation’s laws to protect the rights and interests of working persons, and to enable them to obtain a fair and decent wage through collective action,” Judge Stephen Reinhardt, writing for the majority, said. “Reducing workers’ wages and benefits is hardly an objective that would justify a violation of our antitrust laws.”

California sued the three grocers six years ago, saying the so-called mutual strike assistance agreement violated federal antitrust law and led to higher prices. A 141-day strike and lockout at the companies’ Southern California stores was the longest in the industry’s history and was mainly over proposals requiring workers to share health-care costs and establish a two-tier pay system.

Meghan Glynn, a spokeswoman for Cincinnati-based Kroger Co., the parent of Ralph’s; Mike Siemienas, a spokesman for Eden Prairie, Minnesota-based Supervalu Inc., the parent of Albertson’s; and Teena Massingill, a spokeswoman for Pleasanton, California-based Safeway Inc.’s, owner of the Vons brand, didn’t immediately return calls for comment.

The case is State of California v. Safeway, 08-55671, U.S. Court of Appeals for the Ninth Circuit (San Francisco.)

By Edvard Pettersson - Aug 17, 2010 12:55 PM PT