Washington State AG Bob Ferguson files lawsuit to block Kroger-Albertsons merger
Washington State Attorney General Bob Ferguson on Jan. 15 filed a lawsuit to block the proposed Kroger-Albertsons grocery merger. Ferguson asserted in a statement that the proposed merger of the two largest supermarket companies in Washington state will severely limit shopping options for consumers and eliminate vital competition that keeps grocery prices low.
Ferguson also asserts in a press statement that a proposal by Kroger and Albertsons to mitigate the impacts of their merger, which includes selling off more than 100 stores in Washington, does not change the fact that Kroger would still enjoy a near-monopoly in many markets in the state. In addition, the plan to sell the stores to a company that is primarily a wholesale supplier could set up many of the divested supermarkets to fail, endangering Washington jobs and further diminishing choices for Washington shoppers.
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"This merger is bad for Washington shoppers and workers,” Ferguson said. “Free enterprise is built on companies competing, and that competition benefits consumers. Shoppers will have fewer choices and less competition, and, without a competitive marketplace, they will pay higher prices at the grocery store. That’s not right, and this lawsuit seeks to stop this harmful merger.”
The lawsuit, filed Monday in King County Superior Court seeks to block the merger of Kroger and Albertsons nationwide. Ferguson asserts the merger eliminates Kroger’s closest competitor and decreases customer choice by significantly increasing the concentration of stores owned by the same company throughout Washington.
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"Even company executives have expressed that the merger might be illegal. After rumors of the proposed merger surfaced, a vice president with Albertsons wrote that “you are basically creating a monopoly in grocery with the merger… [it] makes no sense.” An Albertson’s Human Resources director wrote of the merger: “It’s all about pricing and competition and we all know prices will not go down,'" the statement says.
Ferguson’s lawsuit asks the court to find that the merger violates Washington antitrust law, and to issue an injunction permanently blocking the merger nationwide.
Assistant Attorneys General Paula Pera, Miriam Stiefel, Helen Lubetkin and Amy Hanson, paralegals Michelle Oliver and Kate Iiams, and Litigation Support Manager Kimberly Hitchcock are handling the case for Washington.
On Monday, Kroger, Albertsons and C&S Wholesale Grocers updated their anticipated closure timeline and issued the following joint statement:
"We remain in active and ongoing dialogue with the Federal Trade Commission and individual state Attorneys General regarding our proposed merger and divestiture plan. We believe our merger with Albertsons and the comprehensive divestiture to C&S will result in the best outcomes for customers, associates and our communities."
The statement continued, "In light of our continuing dialogue with the regulators, we are updating our anticipated closure timeline. We currently anticipate that the closing will occur in the first half of Kroger's fiscal 2024. While this is longer than we originally thought, we knew it was a possibility and our merger agreement and divestiture plan accounted for such potential timing. We remain committed to closing the transaction and providing the meaningful and measurable benefits that we promised when we originally announced the transaction."
"Kroger's combination with Albertsons will mean lower prices and more choices for more customers. With a proven record of lowering prices year over year, Kroger will invest $500 million to reduce prices beginning day one, as well as an incremental $1.3 billion to enhance the customer experience. The merger will mean more fresh, affordable food is available to more people in more communities," the statement said.
The statement continued, "Kroger is committed to protecting good-paying union jobs, with no store closures or frontline associates laid off as a result of the merger. In addition, Kroger will invest an incremental $1 billion to raise wages and comprehensive benefits for all associates post-close. This builds on the $1.9 billion in incremental investments the company has made in wages and comprehensive benefits since 2018. Additionally, post-close Kroger will provide 700,000+ part-time and full-time associates access to its continuing education benefit, which offers up to $21,000 of reimbursement toward higher learning or continued development. The combined company will also expand access to its Goldman Sachs Ayco financial coaching tool."
"As the identified divestiture buyer, C&S Wholesale Grocers has also committed to recognize the union workforce and maintain all collective bargaining agreements, and is committed to retaining frontline employees and further investing for growth. This is the best outcome to secure the future of union jobs in the American grocery industry."
Lastly, the statement said, "The merger will also result in more opportunities to invest in communities across the U.S., as Kroger continues its mission to create neighborhoods free from hunger and food waste. Last year, Kroger announced a commitment to donate 10 billion meals upon completion of the merger to families across the country by 2030. This is enough to feed every person in the cities of Seattle, Denver, Chicago and Boston every meal, every day for nearly two years."