Washington Attorney General Bob Ferguson is suing to stop the proposed merger of two of the country’s largest grocery store chains.
Kroger and Albertsons announced plans to merge in October 2022. The two companies say uniting is necessary to combat losing shoppers and sales revenue to discount chains, big box stores and online grocery services. A report prepared for the two companies last year said the merger would preserve the viability of Albertsons and would help Kroger lower prices.
Ferguson’s suit, filed Monday in King County Superior Court, argues the merger would effectively eliminate competition between the two biggest entities in Washington’s grocery market and create a near-monopoly.
“More than half of all supermarkets in Washington are currently owned by either Kroger or Albertsons. They account for more than half of supermarket sales in our state,” Ferguson said during a press conference announcing the suit.
Ferguson is asking the state court system to find the merger in violation of Washington antitrust law, and to issue an injunction that would block the merger nationwide.
There are 184 Safeway stores and 16 Albertsons stores in Washington, according to the company. Albertsons also owns Haggen, a chain that has fifteen locations in Washington, mainly along the Interstate 5 corridor. Kroger owns the Fred Meyer brand, which has 59 Washington locations, and QFC, which brands 55 western Washington grocery stores. In total, the two companies operate 314 grocery stores in the state.
“If Kroger and Albertsons merge, they will, simply put, dwarf the competition. Shoppers will have fewer choices and less competition. And that results in higher prices,” Ferguson said. “To put it another way, nobody buys their cheap competitor to lower prices.”
Last August, Albertsons and Kroger pledged to sell 104 Washington grocery stores, 13 in Idaho, some of their store and product brands, and some distribution centers to allay concerns about market dominance. The two companies say C&S Wholesale Grocers would buy the stores and other assets.
Ferguson’s lawsuit says running grocery stores is not C&S’ chief business, and the suit raises questions about whether the company could handle transitioning to a major grocery retailer in a short period of time.
“If those stores fail, hundreds of Washingtonians could lose their jobs and grocery choice could be diminished even further for Washington shoppers,” Ferguson’s office said in a prepared release.
The lawsuit also says there’s a possibility the combined Kroger-Albertsons entity could buy some of its old stores back, rendering the divestiture plan moot. A similar outcome happened when Albertsons merged with Safeway in 2015, the Attorney General’s office said. The combined chains sold 26 Washington locations to a smaller company, Haggen. When it declared bankruptcy less than a year later, 127 Haggen locations closed, including 14 in Washington. Albertsons purchased the Washington stores back, sometimes for as little as a dollar apiece at auction.
Albertsons and Kroger say the C&S divestiture plan is designed to prevent a similar situation.
In a joint press release Monday, Kroger and Albertsons said they remained committed to the merger, which they said would “result in the best outcomes for customers, associates and our communities.” Their goal for finalizing the arrangement is sometime within the first half of Kroger’s fiscal year, which ends August 17.
