Colorado Files Lawsuit to Block Kroger-Albertsons Merger

Two States Now Challenging Kroger’s Pending Acquisition
Kroger store Houston
A Kroger grocery store in Houston. (Mark Felix/Bloomberg News)

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Colorado sued to block Kroger Co.’s $24.6 billion acquisition of Albertsons Cos. in court Feb. 14, becoming the second state to challenge the deal.

Attorney General Phil Weiser announced the lawsuit was filed in state court during a press conference, saying the acquisition would leave some Colorado communities with less access to groceries. A proposal to divest some stores to Piggly Wiggly chain owner C&S Wholesale Grocers Inc. wouldn’t be enough to replace the lost competition, Weiser said.

“We have very serious concerns about this merger,” Weiser told reporters. “We are convinced it would be bad for shoppers, workers, farmers” and others.

The companies’ divestiture plan calls for C&S to acquire 50 Safeway stores and two Albertsons stores, even though the company currently has no operations in Colorado, Weiser said. The state is seeking a preliminary injunction that would prevent the deal from closing, he said.

Kroger and Albertsons said in a joint statement that they are disappointed in Weiser’s premature decision to file a lawsuit while the merger is undergoing regulatory review and that they are in discussions with regulators and other state attorneys general. The companies said they will defend this in court.

C&S said in its own statement that acquiring the divested stores would benefit consumers and workers and that the company has an experienced management team in food retail.

“C&S also brings experience with the merger process, having been an FTC-approved buyer in prior grocery transactions with a strong track record of successfully transitioning union employees and their associated collective bargaining agreements,” company spokesperson Lauren La Bruno said.

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Kroger agreed to buy Albertsons in late 2022 for about $24.6 billion to better compete against rivals such as Walmart Inc. The deal has drawn opposition from elected officials and workers, and the Federal Trade Commission has been reviewing the proposed tie-up. The companies have said they would invest $500 million to cut prices and $1 billion to raise wages and benefits, in addition to $1.3 billion to improve Albertsons stores.

Colorado is the second state to sue over the deal. Washington’s attorney general sued last month over the proposed merger. The FTC has been reviewing the deal for more than a year and is expected to make a decision on whether to file a national suit to challenge the deal before the end of the month.

Separately, Colorado alleged in the suit that there was an agreement between the two grocers not to poach each other’s workers during a 2022 strike by Kroger employees. The companies also had a nonsolicitation agreement not to seek to persuade pharmacy customers to switch, Weiser said.

Kroger and Albertsons rank Nos. 38 and 40, respectively, on the Transport Topics Top 100 Private Carriers list.