In the case of California v. American Stores Co., the Supreme Court ruled in 1989 that federal courts have authority to order divestiture as a remedy for violation of state antitrust laws, reversing an earlier decision by the Ninth Circuit Court of Appeals. The State of California had sought this measure after American Stores Company acquired another supermarket chain, Alpha Beta, arguing that it would reduce competition and increase prices for consumers. The lower court held that only injunctive relief was available under Clayton Act's section 16 which allows states to sue on behalf of their citizens when threatened with loss or damage due to violations of antitrust laws. However, the Supreme Court disagreed stating there is no explicit language in Section 16 limiting remedies solely to injunctions and thus divestiture could be ordered if deemed appropriate.

In the dissenting opinion for California v. American Stores Co., Justice Scalia disagreed with the majority's decision to allow states to seek divestiture as a remedy under federal antitrust laws without showing that they suffered any direct injury. He argued that this interpretation of the Clayton Act was inconsistent with its legislative history and purpose, which he believed was intended to protect competition rather than competitors. Furthermore, he expressed concern about potential conflicts between state and federal courts if both were allowed to order divestiture in antitrust cases. Justice Scalia also criticized the majority for not adequately addressing these issues in their opinion.