Faced with unnamed rival bidders for Lucky Stores Inc., American Stores Inc., the Salt Lake-based company that is attempting to acquire Lucky Stores Inc. here, has proposed an auction be held next week to settle the competition.

Lucky says it has received other takeover bids to compete with a $1.74 billion hostile assault by American Stores but did not disclose the identities of the bidders nor the value of their offers. But Lucky said Tuesday it is in the process of reviewing the bids and exploring alternate means of providing greater value to shareholders than the American Stores bid. It said last week that among its options was a leveraged buyout.American Stores has made a $45 per share hostile tender for Lucky and has said it would pay $50 a share in a friendly merger, but Lucky's board said even the $50 per share offer was inadequate.

In Washington Tuesday, American Stores told federal regulators it proposed that Lucky Stores be auctioned to the highest bidder next Monday.

In a letter to Lucky, American Stores proposed that all interested bidders be given full access this week to information on Lucky's financial situation, its stores and management.

The winning bidder would be required to sign a merger agreement with Lucky prior to May 6, and to launch its tender offer for all Lucky common shares by May 6.

American Stores proposed that losing bidders could take no action to impede the winning bid for 50 days after May 6. The letter was contained in a filing with the Securities and Exchange Commission.

As part of the auction, Lucky would be required to use its "poison pill" and other defensive devices to protect the winning bidder and to oppose all other bids, American said.

The auction process, it said, would eliminate its perceived timing advantage in bidding for Lucky, would end disruptions to Lucky and its personnel, and would save Lucky the financial and other costs of extended litigation.

American said it would be willing to modify the proposal, adding that it is confident of its ability to submit the best bid.

American Stores Inc. is the third-largest U.S. operator of grocery and drug stores, with about 1,620 stores in 40 states. Its retail operation includes Acme Markets, Alpha Beta, Jewel Food Stores and Osco Drug.

Lucky operates about 480 food stores in California, the Southwest and Florida and is the sixth-largest U.S. grocery chain operator.