Legal War Declared Over Albertsons/Kroger Merger Plans
Trevor Phipps
When news first hit that two of the biggest grocery store giant corporations planned to merge together, consumers across the country got worried.
Locally, many immediately thought that it would mean the loss of one of the grocery stores in Woodland Park since the potential merge involves Albertsons (who owns all Safeway stores) and Kroger (who owns all City Market and King Soopers stores).
And since Woodland Park is a rather small town that has both a Safeway and City Market, many figured that the merger meant one of the two stores would eventually close down. During the community meeting, it was brought up that if one of the town’s few grocery stores was forced to shutter, it would impact many employees and other businesses located in the shopping center of the closed store.
However, earlier this month it was announced that Attorney General Weiser would be filing a lawsuit against the two companies in an attempt to stop the $24.6 billion merger. This means good news for local shoppers because if the merger does end up going through, and one of the two stores does close, then at least it will be delayed until the lawsuit has made its way through court.
On Feb. 14, Weiser joined the attorney general of Washington (state) to become the second state that has filed a lawsuit to stop the merger.
After Weiser filed his lawsuit, the Federal Trade Commission (FTC) and a number of other states also decided to sue to stop the merger. That latter action is quite significant.
According to a press release posted on the state attorney general’s website, Kroger operates 148 stores in Colorado under the King Soopers and City Market brands, and Albertsons operates 105 stores under the Safeway and Albertsons banners.
“The attorney general asserts that the merger would eliminate head-to-head competition between the two companies and consolidate an already heavily concentrated market, which is bad for Colorado shoppers, workers, farmers, and suppliers,” the press release stated.
Across the country, Kroger faces competition from other grocery store companies, but Weiser said that Colorado would see a greater impact than other states if the merge went through. Kroger is currently the largest grocery store chain in the state and Albertsons is the third largest.
If the merge were to go through, Kroger would then own more than half of the state’s grocery market share. Weiser also mentioned that smaller communities in the state, such as Woodland Park, would see even a greater impact.
“These fears are warranted because the market for grocery stores in Colorado is already very concentrated with too little competition,” Weiser said in a press conference. “And the merger would make the problem worse. We need to remember lessons from past grocery store mergers.”
Weiser’s recent move has echoed sentiments expressed by grocery store unions and industry experts across the country. Many have argued that the merger of the two grocery giants would cause a rise in food prices across the board and/or lead to a loss of jobs in the industry.
Attorney General Also Sues Over “Non-Poach” Agreement
On top of filing a lawsuit to block the merge, Weiser also sued the two companies over an agreement they made with each other during a strike by Kroger workers that took place in 2022. “The grocery giants Albertsons and Kroger illegally colluded to weaken workers’ leverage amid strikes and contract negotiations in 2022,” Huffpost.com reports.
However, both companies have spoken out against all of the claims made by Weiser. “There was not then, and there is not now, non-solicitation or so-called no-poach agreements between Kroger and Albertsons,” a Kroger spokesperson told Huffpost. “Employees at both companies regularly join our teams from, and exit our companies for opportunities to work at, Albertsons, Kroger, Walmart, Amazon, Costco and other retailers.”
“Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today,” said Henry Liu, director of the FTC’s Bureau of Competition, according to CNBC. “Essential grocery store workers would also suffer under this deal, facing the threat of their wages dwindling, benefits diminishing, and their working conditions deteriorating.
But executives from Kroger say that preventing the merger will give big box stores like Amazon, Walmart and Costco a competitive advantage. “The FTC’s decision makes it more likely that America’s consumers will see higher food prices and fewer grocery stores at a time when communities across the country are already facing high inflation and food deserts,” the company said in a statement.
Some experts have said that even though two states have sued the two companies, the merger is still likely to take place eventually.
