Washington state has asked a judge to block a proposed $25 billion merger between two of America’s largest grocery chains, Kroger and Albertsons, claiming the new entity would harm customers and raise prices.
A lawsuit filed in King County Superior Court on Monday seeks to block the proposed Kroger-Albertsons merger, calling it “presumptively unlawful” and alleging that together, the stores would “account for more than 50% of supermarket sales statewide.”
The suit is the first formal move by regulators to halt the acquisition of Albertsons, which also operates Haggen and Safeway, by Kroger, the parent of QFC and Fred Meyer, arguing that it would “create a monopoly.”
“The ultimate effect of that lessening of competition would be to increase the likelihood that prices of food and other grocery products in supermarkets offered to Washington customers will increase, and that the quality of choices available to Washington consumers will decrease,” said the suit that was earlier reported on by The Seattle Times.
In a statement issued after the lawsuit’s filing, Washington state Attorney General Bob Ferguson said: “This merger is bad for Washington shoppers and workers.”
“Free enterprise is built on companies competing, and that competition benefits consumers,” Ferguson added.
“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.”
Kroger and Albertsons have more than 300 locations in Washington — 194 of which are in the Seattle metro area alone — one of the largest concentrations in the US, according to the court documents.
Washington and other states had previously sued over issues related to the acquisition, including a special $4 billion dividend Cincinnati-based Kroger planned to reward Boise, Idaho-based Albertsons’ shareholders.
California Attorney General Rob Bonta, along with the attorneys general of the District of Columbia and Illinois, filed a preliminary injunction to block the so-called “special dividend” in 2021.
King County Superior Court Judge Ken Schubert denied the injunction, and the payout has since been delayed as the merger remains under review.
Now, California is reportedly considering a similar merger-blocking lawsuit to the one filed by Washington state on Monday, according to The Seattle Times, which reported that the Federal Trade Commission is also considering its own legal action to stop the acquisition.
A spokesperson for Kroger and Albertsons — “both the products of prior multibillion-dollar mergers,” per Monday’s court filing — said the companies “are disappointed in Attorney General Ferguson’s premature decision to file a lawsuit while the merger is still under regulatory review.”
“Blocking this merger would only serve to strengthen larger, non-unionized retailers like Walmart, Costco and Amazon, by allowing them to maintain and increase their overwhelming and growing dominance of the grocery industry,” the spokesperson added.
“We remain in active and ongoing dialogue with the FTC and the other state attorneys general.”