Colorado AG: C&S Plans to Divest Stores Following Kroger-Albertsons Merger

The Colorado Attorney General, Phil Weiser, has initiated a lawsuit challenging the $24.6 billion merger between Kroger and Albertsons. The case, which began in Denver on Monday, is the third antitrust lawsuit facing the two grocers. Central to Colorado’s argument is the planned divestiture of 579 stores to C&S Wholesale Grocers as part of the merger, with the state claiming that C&S intends to liquidate those stores rather than operate them long-term.

During the proceedings, Assistant Attorney General Arthur Biller argued that C&S, which currently operates around two dozen stores, is unlikely to compete with Kroger and Albertsons, asserting that the company is an “opportunistic buyer” with no long-term plans to manage the stores. Biller suggested that C&S’s goal is to eventually sell the locations, weakening competition.

Kroger’s attorney, Matt Wolf, rejected this notion, calling the claim a “conspiracy theory” and stating that it makes no business sense for C&S to buy the stores for $3 billion only to sell them for $2 billion. Kroger maintains that C&S is well-positioned to take on the stores and compete effectively, with Susan Morris, Albertsons’ Chief Operating Officer, set to lead C&S’s retail operations if the deal is approved.

The Colorado lawsuit also includes allegations that Kroger and Albertsons violated state antitrust laws during a 2022 strike by King Soopers employees. The state accuses the two companies of colluding to not poach each other’s workers or steal pharmacy customers during the strike, seeking $1 million in damages from each grocer. Both companies have denied the claims, insisting that no non-solicitation agreements existed between them.

The court case in Denver is expected to last about three weeks, with significant implications for the merger’s future and competition in the grocery market.