Washington Attorney General Challenges Kroger Albertsons Merger

In a major move, the Washington Attorney General has launched a legal challenge against the merger of Kroger and Albertsons, the two leading supermarket chains in the U.S. This $24.6 billion mega-deal has been in the spotlight due to its potential impact on food retail competition.

Kroger, the top grocery retailer in the industry with 2,719 stores nationwide, boasts popular chains like Ralphs, Harris Teeter, Fred Meyer, and King Soopers under its umbrella. Albertsons, trailing closely behind with 2,272 stores, is the proud owner of Safeway and Vons. Together, they provide jobs for approximately 720,000 people.

The supermarkets claim they must join forces to survive in the harsh landscape of food retailing, dominated by Amazon, Costco, and particularly Walmart, which sell more groceries than both Kroger and Albertsons combined. They appear to pin their hopes on their union status, distinguishing them from their rivals. They planned to wrap up the merger deal by August.

However, the lawsuit filed by the Washington Attorney General, Bob Ferguson, might put the brakes on their plan. According to Ferguson, these two chains already own more than half of all supermarkets in his state. Therefore, their merger would obliterate the competition and force consumers to pay more for their groceries.

Despite these issues, Kroger and Albertsons were quick to label the lawsuit as a hasty move. They pointed out that the Federal Trade Commission had not concluded its review of the merger. The supermarkets intend to put up a vigorous legal defense, arguing their merger would ultimately benefit their customers.

This merger has been a monopoly concern for quite a time. The FTC and several state officials have been discussing it for over a year now, citing fears of reduced options for shoppers and food producers. Leading the offense, in May 2023, Kroger’s CEO signaled their readiness to take on legal challenges.

As part of their plan to alleviate regulator concerns, Kroger and Albertsons found a buyer for about 650 of their overlapping stores: C&S Wholesale Grocers. However, these measures didn’t satisfy the attorney general, insisting they would continue to hold a monopoly-like influence, particularly in several regions of Washington.

Albertsons’ past merger with Safeway, wherein they were forced to sell 168 stores only to have them face bankruptcy, also triggered skepticism. This merger is now a high-profile test for the Biden administration, which has been critical of such large-scale corporate couplings and their effects on market competition.