At one time, there were two grocery stores in the City of Avalon, on Santa Catalina Island. One was owned by Vons. The second was run by an independent grocery store operator who leased the store site from the Santa Catalina Island Company. About six years before this case, the independent grocery store operator decided to retire, and at least one other island resident proposed to operate a grocery store on that site. The Santa Catalina Island Company instead invited Vons to take over the lease which Vons did, renaming the second store the Vons Express. After investigating, the state determined that the transfer of the lease to Vons was an anticompetitive acquisition and created an illegal monopoly in violation of the antitrust laws. After negotiations, agreement was reached with Vons as a defendant and Santa Catalina Island Company as a third party pertaining to both stores with forward-looking remedies designed to ameliorate the monopoly of the grocery store market. Regarding the Vons Express store, Santa Catalina Island Company was required to undertake a search for a new tenant over a four-month period to run it as an independent grocery store and to offer the new tenant, if one is found, a six-year lease with below-market rent and other certain pro-tenant provisions; detailed provisions are set out as to the selection and qualifications of the new tenant and as to potential future developments involving the property. At the same time, Vons is required to run the Vons Express for a six month period, to leave the Vons Express if a new tenant is found, to notify its employees that they shall not illegally interfere with the new tenant’s contractual relationships with third parties, and to offer the new tenant, at almost no cost, the fixtures, equipment, and liquor license of the Vons Express. Regarding the Vons store, Vons agreed to state in the consent decree that it had no present intent of closing down that store, undertook to keep it open for at least six months, and agreed that if it ever sold or leased the store to a third party, it would not insert any covenants preventing the third party from running a grocery store business on the site. Vons also agreed to make a $60,000 charitable donation to the City of Avalon and to pay $25,000 of our investigative expenses.
Among other things, this consent decree reaffirms a seldom-used common law principle of antitrust law, that originated in a 1907 California Supreme Court case, regarding the duties of real estate owners to avoid land use decisions that create a monopoly. The court approved the consent decree.