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WA fears grocery merger monopoly as inflation worsens

Nov 3, 2022, 1:46 PM | Updated: 6:13 pm
grocery...
Shoppers are seen in a Kroger supermarket on October 14, 2022. (Photo by Elijah Nouvelage / AFP) (Photo by ELIJAH NOUVELAGE/AFP via Getty Images)
(Photo by ELIJAH NOUVELAGE/AFP via Getty Images)

Update: 

On Nov. 3, King County Superior Court Commissioner Henry Judson approved state Attorney General Bob Ferguson’s motion to temporarily block Kroger’s $4 billion dividend to investors — originally scheduled to be paid Monday.

Original:

After Kroger and Albertson’s agreed to merge over a $20 billion deal — which would allow grocery store Kroger to acquire Albertson’s — Washington state Attorney General Bob Ferguson has filed a lawsuit to prevent and otherwise stop the agreement between the grocery chains.

The suit was created against Albertson’s for paying its shareholders dividends ahead of a proposed merger with Kroger.

This follows Ferguson’s decision to partner with six attorneys general from around the country to urge Albertsons to delay paying the special dividends until the states complete their review of the proposed merger. In the letter, the attorney generals cite that the $4 billion payout represents about a third of Albertsons’ total stock value. The letter was released Oct. 26.

Kroger currently owns Fred Meyer and QFC stores. Albertson’s owns Safeway and Haggen.

AG: Grocers ‘cannot sabotage their ability to compete,’ halting payout

Albertson’s stated there is no reason for a lawsuit, while the company’s stock has tumbled nearly 30% since the merger was announced.

The deal also still requires federal regulatory approval.

Some people around the region are worried it will create a monopoly and give the merged company too much control over available groceries.

“Grocery prices are already high enough,” a woman told KIRO Newsradio. “It seems to me like that will make them higher since it’ll be like price fixing.”

She said eliminating choices for people is never the right answer.

The Food at Home Index, an approximate evaluation of grocery store costs, reported an increase in food prices by 0.7% in September and a stunning 13% over the last year, according to the Consumer Price Index.

Amidst the rising costs, Seattle City Council recently voted to repeal the city’s $4 per hour COVID-19-influenced “hazard pay” for grocery store employees. Seattle Mayor Bruce Harrell approved the measure Aug. 3.

“Honestly, there would not be that many affordable options in the area,” another man told KIRO Newsradio during his lunch break. “I mean, most people, their houses, they have maybe one or two grocery stores within walking distance.”

He also worries the merger could create a monopoly on goods and allow the newly-formed company to increase prices exponentially.

“I do know that mergers tend to raise prices in general, so that’s why I’m extremely wary of it and also, I’m wary anytime choices go down,” he continued.

The merger creates a company that encompasses nearly 5,000 stores, reaching approximately 85 million households across the U.S. Kroger would own a share of the U.S. grocery market second to only Walmart.

In January as many as 42 million Americans said that they could not afford to buy enough food, according to the Census Bureau’s Household Pulse Survey.

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Others have approved of the merger, provided nothing changes.

“As long as prices stay somewhat similar and they don’t get hiked up and I don’t lose all the Safeways that are around me here, then I’d be fine with it I guess,” a man told KIRO Newsradio.

The companies have both stated in prepared statements that they are willing to sell stores to rivals to ease concerns over a potential monopoly.

Meanwhile, Attorney General Bob Ferguson has filed suit to stop Albertson’s from paying dividends to shareholders ahead of the merger.

Follow Nicole Jennings on Twitter or email her here

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WA fears grocery merger monopoly as inflation worsens