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Stop & Shop, the New England division of embattled Ahold USA, is being investigated by the Connecticut Attorney General’s office for alleged anti-competitive real estate practices.

“We have an investigation ongoing regarding real estate deals and practices by Stop & Shop that may be anti-competitive,” Connecticut Attorney General Richard Blumenthal told MNB in an interview yesterday. The allegations charge that the company may have made real estate transactions -- such as buying out leases or entire pieces of real estate -- that were explicitly designed to exclude competition from taking over specific locations, even if Stop & Shop had no intention of using the space itself.

“It could violate antitrust laws,” Blumenthal said, though he noted that whatever actions Stop & Shop took would have to be shown to specifically and overtly exclude competition.

Stop & Shop spokesperson Kelly O’Connor told MNB, “We’re cooperating fully with the Connecticut Attorney General.”

Blumenthal said that the investigation began a month or two ago, and that his office hoped to conclude it “as soon as possible,” though he would not identify a target date for the probe to be wrapped up. He said the investigation was prompted by “complaints from consumers, town officials, and others.”

While he would not speculate as to possible next steps in the Stop & Shop case, Blumenthal said that these kinds of investigations can lead to an antitrust action in court, or negotiations with the subject of the probe.

Sources told MNB that the Attorney General’s office has been interviewing numerous retailers around the state about the Stop & Shop charges, including Big Y and Price Chopper. Officials of those companies could not be reached for comment late Monday.

Blumenthal said that the antitrust investigation into Stop & Shop’s activities were not related to ongoing US Securities and Exchange Commission (SEC) and Department of Justice probes into accounting irregularities at Ahold’s US Foodservice division. Ahold has been in turmoil of late, since the February revelation that US Foodservice had overstated profits by a half-billion dollars for a two-year period, which resulted in the forced resignations of the Dutch-owned company’s CEO and CFO.

Ahold USA’s six retailing divisions, which operate more than 1,600 stores along the eastern seaboard, and its online grocery service, Peapod, have not been implicated in the financial irregularities.
KC's View:
Just what Ahold needs…another potential scandal to deal with.

Attorney General Blumenthal has a reputation for being a tough prosecutor with a strong consumerist bent…and we suspect that whatever happens, this story is not likely to vanish via obscure press release.

We’re told that the retailers that believe they have been victimized by Stop & Shop are up in arms about its real estate policies, and are making the kind of noise that Blumenthal’s office will find hard to ignore.

Stay tuned.