Attorney General Bob Ferguson argues that the $24.6 billion merger would harm consumers by reducing competition and increasing prices across Washington’s grocery market.
The legal battle over the $24.6 billion Kroger-Albertsons merger continues to unfold, with Washington state pursuing its own lawsuit while both grocery chains await a ruling from a separate case brought by the Federal Trade Commission (FTC) and nine attorneys general.
The FTC’s case, recently heard in a U.S. district court in Portland, Oregon, involved accusations that the merger would reduce competition and harm consumers. Though the hearing has concluded, no definitive ruling has been issued, and Judge Adrienne Nelson has given both parties until September 27 to submit additional findings and legal arguments.
While the federal case moves toward its next phase, Washington Attorney General Bob Ferguson is pressing forward with his state’s lawsuit, which he contends is necessary to protect consumers from increased prices and reduced competition. Ferguson has argued that the proposed merger between the two grocery giants would violate Washington state’s antitrust laws.
He emphasized in a statement, “Free enterprise is built on companies competing, and that competition benefits consumers.” The attorney general’s office asserts that merging Kroger and Albertsons would lead to a less competitive grocery market in Washington, where the chains operate more than 300 stores combined.
At the heart of Washington’s case is the belief that the merger is unnecessary for the survival or success of either company. During opening arguments on September 16, Glenn Pomerantz, representing Ferguson’s office, argued that Kroger and Albertsons do not need to merge in order to remain competitive, referencing larger competitors like Amazon and Walmart but dismissing them as existential threats. “Kroger and Albertsons don’t need to merge to be successful. They’re already successful,” Pomerantz noted, as reported by Legal Reader.
In contrast, Kroger’s legal team, led by attorney Mark Perry, has argued that the merger is essential for the grocery chains to effectively compete with large retailers like Amazon and Walmart.
According to Perry, these companies represent a significant threat to traditional grocery chains, which is driving the decision to merge. “The evidence will establish that Kroger and Albertsons do face an existential threat from these behemoths, and that this merger is their response to that threat,” Perry stated, according to Legal Reader.
Another focal point in the debate involves the planned divestiture of stores under the proposed merger. To address antitrust concerns, Kroger and Albertsons have agreed to divest 579 stores to C&S Wholesale Grocers, which operates Piggly Wiggly stores.
However, critics argue that C&S cannot successfully manage such a large influx of locations. John Marshall, a financial analyst for the labor unions representing Kroger and Albertsons workers, expressed skepticism over the choice of C&S, pointing to its financial struggles in recent years. According to Marshall, “C&S has seen its sales decline by 21.5% between 2017 and 2023,” and has faced challenges in maintaining its wholesale operations.
In an effort to address concerns about C&S’s ability to manage the divested stores, Kroger and Albertsons disclosed in July that if the merger goes through, Albertsons Chief Operating Officer Susan Morris would transition to C&S to serve as its president and CEO of retail.
Morris, who was involved in Albertsons’ acquisition of Safeway in 2015, testified in early September that although she played a role in that transaction, she had limited direct involvement in the divestiture process. That 2015 merger is of particular concern to Washington state, where a failed divestiture to Haggen, a regional grocer, resulted in many stores being sold back to Albertsons after Haggen struggled to remain viable.
In addition to the ongoing cases in Washington and Oregon, Kroger and Albertsons face yet another legal challenge in Colorado, where the state’s attorney general has filed an antitrust lawsuit. The Colorado case, set to go to trial on September 30, includes allegations that the grocery chains violated the state’s antitrust laws by engaging in no-poach agreements during a labor strike at Kroger-owned King Soopers in 2022. Colorado Attorney General Phil Weiser stated earlier this year that such agreements, which prevent companies from hiring each other’s workers or soliciting each other’s customers, are illegal under state law.
As the legal proceedings continue across multiple states, the future of the Kroger-Albertsons merger remains uncertain. While the grocery chains argue that the merger is necessary to compete in a rapidly evolving retail landscape, opposition from state governments, labor unions, and consumer advocates highlights the complexity of balancing market competition with corporate consolidation.
