RETAIL

COURT REJECTS WAL-MART CLAIM IN FIGHT WITH CALIFORNIA TOWN Wal-Mart Stores, the world’s largest retailer, can’t block officials in Turlock, Calif., from banning discount retail outlets containing grocery stores, a state appeals court ruled yesterday.

The state appeals court in Fresno rejected Wal-Mart’s claim that the city’s ordinance should undergo environmental review. Wal-Mart had sued Turlock, a city of 67,009, arguing that a “Supercenter” selling groceries with other merchandise reduces congestion and pollution because shoppers drive less.

The decision came a day after Wal-Mart, seeking to blunt opposition to its urban expansion, said it would open about 50 stores in areas plagued by unemployment and crime. City officials said Wal-Mart’s plan to replace an existing store with a Supercenter would squeeze grocers out of business.

While zoning ordinances can’t be used to control economic competition, they may “address the urban and suburban decay that can be its effect,” the court said yesterday in its opinion. Local governments need “flexibility” to react to development that “will or may have harmful consequences to the locality’s legitimate planning objectives,” the court said.

– Bloomberg News

PATHMARK SHARES RISE ON BUYOUT SPECULATION

Shares of Pathmark Stores rose by more than 9% after worse-than-expected fourth-quarter results stoked speculation that the struggling supermarket chain will be sold.

The Carteret, N.J., grocer – which operates 141 stores in the New York City, New Jersey, and Philadelphia areas – narrowed its fourth-quarter loss, but analysts had expected a slight profit. Sales also declined slightly, missing Wall Street’s expectations. The poor results point to a potential buyout of Pathmark “sooner rather than later,” said Karen Short, an analyst at Soleil Securities, whose expectations had been the lowest on the Street.

– Dow Jones Newswires

IN THE COURTS

NETFLIX SUES BLOCKBUSTER, ALLEGING PATENT INFRINGEMENT

The largest mail-order movie-rental service sued the world’s largest video-rental chain Tuesday saying, in essence, when it comes to no late fees, imitation isn’t flattering.

Netflix accused Blockbuster of patent infringement, alleging that its online site Blockbuster.com illegally copied Netflix’s method of allowing customers to order videos over the Internet.

Netflix asked a federal judge in San Francisco to shut down the 20-month-old Blockbuster.com. It also seeks unspecified damages.

Among the Netflix innovations that Blockbuster allegedly copied: no late fees on movie rentals, allowing customers to get a new DVD as soon as they return one, and the online dynamic queue – a wish list for movies that subscribers can use to prioritize which films they want when.

– Los Angeles Times

GRASSO TO TURN OVER DEPOSITION TRANSCRIPT TO SPITZER

The former New York Stock Exchange chairman Richard Grasso has agreed to turn over a transcript of a deposition he gave the Securities and Exchange Commission last year to the New York State attorney general, Eliot Spitzer, a person familiar with the matter said yesterday.

A lawyer from Mr. Spitzer’s office, Avi Schick, asked a state judge last month to order Mr. Grasso to turn over a copy of a transcript of the June 2005 deposition, saying the attorney general’s office wanted to see it before it completed its own deposition of Mr. Grasso.

The attorney general’s office is expected to complete its questioning of Mr. Grasso this week.

Mr. Schick said Mr. Grasso invoked his Fifth Amendment right against self-incrimination during the SEC’s deposition, which explored his regulatory role as chairman of the Big Board and related to the SEC’s probe into improper trading activity by specialists on the NYSE. Mr. Schick said he wanted the transcript in part to review which questions Mr. Grasso declined to answer.

– Dow Jones Newswires

CONSUMER CREDIT

CITIGROUP, HSBC ARE STYMIED BY CHINESE WHO PAY IN FULL EACH MONTH

Catherine Xia racks up about $996 a month, almost 90% of her salary as an account manager at a Shanghai trading company, on her China Merchants Bank Company credit cards. Yet she never rolls over payments.

“I use credit cards for convenience, not to mire myself in debt,” Ms. Xia, 28, said. “My family tradition is that you save first, then you spend. My parents already frown upon my huge credit-card bills, so I won’t push the limit too far.”

China Merchants, HSBC Holdings, and Citigroup must get more Chinese into the borrowing habit to make money in the nation’s nascent credit-card market, says Ron Logan, who heads the credit-card unit of HSBC’s venture with Shanghai-based Bank of Communications, China’s no. 5 lender.

“While profit may not be immediately possible, this is something that will develop over the next few years,” Mr. Logan said. “Crucial to achieving this is ensuring that the percentage of active cards grows along with revolving balances.”

– Bloomberg News