AG’s Office: Kroger-Albertson merger ‘bad’ for consumers

Jan 16, 2024, 9:40 AM | Updated: 9:41 am

kroger albertson merger AG...

The Albertsons logo is displayed in front of an Albertsons grocery store on October 14, 2022 in Los Angeles, California. Top grocery retailer Kroger has agreed to acquire rival Albertsons for $24.6 billion. (Photo by Mario Tama/Getty Images)

(Photo by Mario Tama/Getty Images)

Washington State filed a lawsuit Monday to block the proposed merger of the two largest grocery stores operating in the state: Kroger, which owns Fred Meyer and QFC stores, and Albertsons, which owns Safeway.

“This merger is bad for Washington consumers,” Attorney General Bob Ferguson said, with a state lawsuit asking the courts to rule that the merger violates Washington antitrust laws.

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Kroger and Albertsons operate more than 300 supermarkets in Washington, including about 194 in the greater Seattle Tacoma Bellevue area. They account for more than half the grocery sales in the state.

“If Kroger and Albertson’s merge, they will – simply put – dwarf the competition,” Ferguson said. “Shoppers will have fewer choices and less competition, and that results in higher prices.”

And Ferguson said the companies, themselves, know it.

“During our investigation, we reviewed hundreds of thousands of records. We uncovered internal chats – between corporate executives and other employees,” Ferguson said. “After rumors of a proposed merger surfaced, a vice president of marketing with Albertsons wrote – and I’m quoting – ‘You’re basically creating a monopoly in grocery, with the merger.’ It makes no sense.”

In a statement to KIRO News Radio, the companies said, “We are disappointed in Attorney General Ferguson’s premature decision to file a lawsuit while the merger is still under regulatory review.”

The Federal Trade Commission is investigating the proposed merger to see if it complies with anti-trust rules.

To ease concerns, Kroger and Albertsons have agreed to sell 413 stores to a competitor, including 104 stores in Washington State.

The company tapped to buy the stores is C&S Wholesale, which Kroger and Albertsons stated is “led by an experienced management team with an extensive background in food retail and distribution and has the financial strength to continue investing in associates and the business.”

Ferguson is less impressed, claiming C&S is a small operation that he predicts would be quickly overwhelmed by competition from the newly combined Kroger-Albertsons stores.

He compared it to when Albertson’s merged with Safeway in 2015. Under a divestiture plan, they sold 146 stores to regional supermarket chain Hagen, which went bankrupt a year later.

But Kroger and Albertsons say their own future is at risk if they don’t combine forces in order to compete in the changing retail landscape.

“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,” they said in a statement.

Kroger and Albertsons maintain a merger would lower prices, strengthen union jobs, and make affordable food available to more communities.

Kroger and Albertsons first announced their proposed $24.6 billion dollar merger in October of 2022. On Monday, the companies said they plan to close the deal in the first half of Kroger’s fiscal 2024 instead of early this year.

Follow Heather Bosch on Twitter or email her here.

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AG’s Office: Kroger-Albertson merger ‘bad’ for consumers