A proposed merger between grocery store giants Kroger and Albertsons is on hold after a lawsuit in Washington State challenged the bid.
The grocery chains agreed to the terms of a merger in 2022 but have been met with opposition from activists and labor unions who claim the proposal would increase prices and reduce consumer options, as previously reported by The Dallas Express.
Kroger and Albertsons claim the $26.4 billion deal is necessary to ensure adequate marketplace competition against newcomers like Amazon and established grocers like Walmart.
On Monday, Washington Attorney General Bob Ferguson requested that a judge block the deal until the potential consequences can be thoroughly evaluated.
“Shoppers will have fewer choices and less competition, and, without a competitive marketplace, they will pay higher prices at the grocery store,” Ferguson said.
Together, Kroger and Albertsons operate more than half of all grocery stores in the state. As part of the deal that has yet to be finalized, the two chains would sell more than 400 stores nationwide to avert a lack of competition. Kroger is the largest grocer in the United States, followed by Albertsons.
A statement from Kroger and Albertsons said the lawsuit filed in King County Superior Court was not unexpected but will delay the merger, which was slated originally for early 2024.
“In light of our continuing dialogue with the regulators, we are updating our anticipated closure timeline,” the grocery stores said in a statement, per The Dallas Morning News. “The merging parties will vigorously defend this in court because we care deeply about our customers and the communities we serve, and this merger will result in the best outcomes for Washington consumers.”
The Washington lawsuit is not the only hurdle the stores must overcome. An ongoing investigation by the Federal Trade Commission (FTC) continues to loom over the proposed deal as lawmakers try to determine the potential outcome of allowing the two largest grocers to merge. Kroger and Albertsons argue that delaying the merger allows non-union stores an unfair opportunity to gain ground in the marketplace.
Six legislators have sent a letter to the FTC urging the commission to rule against the merger. Sens. Elizabeth Warren (D-MA), Mazie K. Hirono (D-HI), Bernie Sanders (I-VT), Cory Booker (D-NJ), and Reps. Summer Lee (D-PA) and Alexandria Ocasio-Cortez (D-NY) signed the letter, which alleges that the proposed merger would result in “a duopoly with Walmart” that would hurt consumer choices. The legislators argue the merger would give the two companies a 70% market share in more than 160 cities nationwide, per Industry Dive.
The statement released by Kroger, Albertsons, and C&S Wholesale, who have agreed to purchase divested stores from the deal, said the merger can now be expected in the summer of 2024, barring further obstructions.
