Colorado AG files lawsuit to block proposed Kroger-Albertsons merger

After a yearlong investigation, Colorado Attorney General Phil Weiser filed a lawsuit in Denver District Court to block the $24.6B proposed merger between Kroger (KR) and Albertsons (ACI). Kroger operates 148 King Soopers and City Market stores and Albertsons operates 105 Safeway and Albertsons stores in the state. According to the lawsuit, the merger would eliminate head-to-head competition between Kroger and Albertsons and consolidate an already heavily concentrated market, which is bad for Colorado shoppers, workers, and suppliers. The lawsuit also challenges an illegal “no-poach” agreement between the two companies during a 2022 strike when employee movement was a threat to Kroger’s operations, the AG said. In an attempt to lessen the anticompetitive impacts of the merger, Kroger has presented a proposal to sell off 413 stores and other assets nationwide to C&S Wholesale Grocers. The AG believes the proposal is inadequate because it would not alleviate the anticompetitive effects of the merger, echoing many of the problems that have plagued failed grocery divestitures in the past. Weiser asserts that the Kroger divestiture plan must be viewed with heavy skepticism in light of Albertsons’ involvement in a failed divestiture plan when it merged with Safeway in 2015. The lawsuit also seeks $1M in civil penalties from Kroger and Albertsons each for entering into the illegal no-poach and non-solicitation agreement during the 2022 King Soopers strike, and to bar the companies from enforcing or entering into such agreements.