On July 25, Denver District Judge Andrew J. Luxen issued a preliminary injunction blocking the proposed $24.6 billion merger between Albertsons and Kroger. Luxe’s decision directly addressed a suit filed in February by Colorado Attorney General Phil Weiser who strongly believes the deal should be denied on antitrust grounds. After Luxen’s decision to hold a two-week trial in Denver beginning on September 30, all parties agreed to the preliminary injunction until five days after the trial.
The September 30 date replaces the original August 12 hearing which would have occurred prior to an August 26 federal hearing to address the Federal Trade Commission’s (FTC) lawsuit which is slated to be heard in U.S. District Court in Portland, OR under the supervision of Judge Adrienne Nelson. From the outset of the deal, which was announced on October 24. 2022, the large federal agency, which is also seeking injunctive relief, has claimed the merger would be anticompetitive and harmful. The suit is also backed by attorneys general in Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon, and Wyoming. Washington state has also filed a separate lawsuit to block the merger.
That essentially means the federal suit will occur first and will set a precedent on whether the two chains can combine entities. Kroger (the surviving retailer) believes the merger will provide a more balanced competitive landscape when competing against the likes of Walmart, Costco and Amazon. Additionally, the Cincinnati-based chain said it would lower prices, spend more than a $1 billion to improve Albertsons physical stores and protect front-line union jobs.
An additional consideration is the 579 stores that C&S Wholesale Grocers is scheduled to acquire as part of the divestiture requirements of the proposed deal.
The original C&S deal, which was announced in September 2023, called for C&S to acquire 413 stores from the two chains (mostly Albertsons banners). C&S and the FTC reportedly were unhappy with the specific list of stores on the list and in April, that list was changed and expanded to 579 supermarkets in 18 states and Washington, DC.
Also included in the deal (if approved) are six distribution centers whose locations have now been revealed – two DCs in Denver; Phoenix; Tolleson, AZ; Salt Lake City; and Auburn, WA. Additionally, C&S would acquire a dairy plant in Denver.
Moreover, if the deal is approved, current Albertsons COO and veteran executive Susan Morris would move to C&S and become president and chief executive of retail for C&S, and former Save A Lot CEO Leon Bergmann will return to C&S (where he began his food industry career) as senior VP/General Manager – West Region.
Now that the Colorado hearing/trial has been moved forward six weeks, AG Weiser stated: “I am pleased that Kroger and Albertsons agreed to halt their plans to merge until the court rules on the state’s lawsuit to permanently block the grocery merger. This is great news for shoppers, workers, farmers, and other suppliers, who can rest assured that this megamerger will not go into effect during harvest season and while kids are headed back to school. The trial is set to begin on September 30 and my office looks forward to making the case that this merger will eliminate competition and impact food prices, jobs, and consumer choice.”
