Washington State Court Challenge in Kroger-Albertsons Merger Continues

The Washington State Court Challenge in Kroger-Albertsons Merger Continues as the state’s lawsuit to block the $24.6 billion deal moves forward this week. This case runs parallel to another major lawsuit brought by the Federal Trade Commission (FTC) and nine attorneys general, which was recently heard in a U.S. district court in Portland, Oregon. Although no specific timeline for a decision has been set, U.S. District Court Judge Adrienne Nelson has given all parties until September 27 to submit post-hearing findings and memoranda.

While the FTC case has concluded its hearings, the Washington state lawsuit, led by Attorney General Bob Ferguson, remains active. Ferguson asserts that the proposed merger violates Washington’s antitrust laws, which could result in higher prices and fewer choices for consumers. “Free enterprise thrives on competition, and that competition benefits consumers,” Ferguson stated earlier this year.

Attorney Glenn Pomerantz, representing the Washington Attorney General’s office, argued that Kroger and Albertsons are already successful and do not need to merge to compete with large retailers like Amazon and Walmart. However, Kroger’s legal team, led by attorney Mark Perry, countered by claiming that these retail giants pose a serious threat to pure-play grocers like Kroger and Albertsons, and that the merger is necessary to counter this competition.

The debate over the merger has been particularly intense in Washington, which has over 300 Kroger and Albertsons stores combined. Washington officials are wary due to the failed store divestiture during the 2015 Albertsons-Safeway merger, where many stores sold to the regional chain Haggen were forced to close within six months.

Under the current Kroger-Albertsons merger proposal, 579 stores would be divested to C&S Wholesale Grocers. However, critics argue that C&S is not equipped to handle such an expansion, pointing to a 21.5% sales decline the company has experienced since 2017. Labor unions representing grocery workers have expressed concerns that C&S may not be able to successfully manage the newly acquired stores.

Kroger and Albertsons attempted to address these concerns by revealing that Albertsons Chief Operating Officer Susan Morris would take on a leadership role at C&S if the merger goes through, overseeing retail operations. Morris testified in the FTC case that while she was involved in the Safeway acquisition, she was not directly responsible for the failed store divestiture.

In addition to the Washington and FTC lawsuits, Kroger and Albertsons will also face a third antitrust case from Colorado Attorney General Phil Weiser. The Colorado hearing is set to begin on September 30 and will focus not only on antitrust violations but also on allegations that the two companies entered illegal no-poach agreements during a 2022 strike involving Kroger-owned King Soopers workers. Colorado’s Attorney General has argued that these agreements violate state antitrust laws by limiting competition.

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