Colorado AG Sues To Stop $24.6B Kroger-Albertsons Merger

Colorado Attorney General Phil Weiser filed a lawsuit Wednesday in Denver District Court to stop the merger of grocery giants Kroger and Albertsons, a deal valued at $24.6B that has major implications for retail centers and consumers across the country. 

The lawsuit seeks to permanently block the merger.

“Coloradans are concerned about undue consolidation and its harmful impacts on consumers, workers, and suppliers,” Weiser said in a press release. “After 19 town halls across the state, I am convinced that Coloradans think this merger between the two supermarket chains would lead to stores closing, higher prices, fewer jobs, worse customer service, and less resilient supply chains.”

Weiser argued in the lawsuit that the merger would shrink sources of groceries in an “already consolidated market,” which would negatively impact Colorado shoppers. In all, Kroger and Albertsons operate more than 250 grocery stores across the state and closely monitor each other to price their goods, Weiser argued. 

Weiser’s suit joins one filed last month by Washington Attorney General Bob Ferguson. That suit lists similar concerns around competitiveness and consumer choice. Both suits come ahead of the Federal Trade Commission’s decision on whether to allow the merger, which is expected this month.

“We are disappointed in Attorney General Weiser’s premature decision to file a lawsuit while the merger is still under regulatory review, and we remain in active dialogue with the FTC and the other state Attorneys General,” Kroger and Albertsons said in a joint statement Wednesday. 

“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. In contrast, Kroger and Albertsons Companies merging will bring lower prices to more customers, strengthen and create good-paying union jobs, and bring more fresh, affordable food to more communities.”

Kroger and Albertsons previously agreed to sell 413 stores nationwide to C&S Wholesale Grocers in a $1.9B deal meant to appease regulators.

Allowing the two companies to merge would give Kroger significant market power to raise prices and reduce quality and services, Weiser said. This would impact people in rural and urban areas alike. Those in urban areas would likely pay higher prices, while people in rural areas like Gunnison, Colorado, would need to drive about 65 miles to Montrose to reach a non-Kroger store, according to the lawsuit. 

In addition to the antitrust lawsuit, Weiser sued Kroger and Albertsons for entering into a so-called no-poach labor agreement in 2022. The lawsuit mentions an email exchanged between Kroger and Albertsons executives in which they agreed to not hire each other’s employees while employees of King Soopers, a Kroger subsidiary, went on strike for better wages, health benefits and safety protections. 

Weiser said the agreement “blatantly violated antitrust law.” The suit seeks a $1M civil penalty from the companies.