Trial begins Monday in a Colorado lawsuit seeking to block the Kroger-Albertsons merger

A Colorado lawsuit seeking to prevent Kroger and Albertsons from joining heads until Monday’s trial as the supermarket giants fight to keep the deal alive amid fierce opposition.

The $25 billion deal announced in 2022 would be the largest supermarket merger in U.S. history. The deal has faced numerous legal challenges at both the state and federal levels from regulators and public officials who say it would hurt buyers and workers by eliminating competition and raising prices.

Kroger operates 148 King Soopers and City Market stores in Colorado and is the largest grocery chain in the state. Albertsons has 105 Safeway and Albertsons stores and is the third-largest grocery retailer in the state. The companies argue that the merger is necessary to compete with big box stores like Walmart.

“This merger would concentrate the market and create a mega-grocery store that would be able to raise prices, have less variety, have fewer stores, offer less local food and worse customer service,” Colorado Attorney General Phil Weiser said in a conference call with reporters this week. “These two chains monitor each other’s prices, and when there is no competition, prices go up.”

The trial in U.S. District Court in Denver begins a week after the Federal Trade Commission’s closing arguments in U.S. District Court in Portland, Oregon. The FTC seeks a preliminary injunction to block the deal, and its complaint goes to an internal administrative law judge. The attorneys general of Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming joined the FTC’s lawsuit. What’s more, Washington state is also in court arguing to block the deal. In July, a judge ordered a temporary halt to the merger while the Colorado case is heard and resolved.

Kroger and Albertsons have agreed to sell 579 stores nationwide to New Hampshire-based C&S Wholesale Grocers to allay concerns that the combined company would create a monopoly in areas with significant overlap. The divestment plan covers 91 stores in Colorado, including most of the state’s Safeway and Albertsons, as well as two distribution centers and a dairy farm.

In theory, the sale to C&S, which operates Piggly Wiggly in the Southeast and Midwest, means there will be no store closings or layoffs. C&S stated that no stores would be closed as a result of the merger and all front-line associates would retain their jobs.

However, a similar solution fell through when Albertsons merged with Safeway in 2015. The buyer, Haggen, went bankrupt less than a year after the sale. In the aftermath, Albertsons bought back many of the stores it had just sold.

“It was a disaster. We don’t want this disaster to happen again,” Weiser said. “C&S is a national distribution company. It runs very few stores. There is no infrastructure or platform for this and we are worried about a repeat of what we saw last time.”

The Colorado lawsuit is expected to last about three weeks. It is unclear which lawsuit – state or federal – will be settled first.

“It’s going to be a really interesting puzzle because there’s no way to really know how long each judge will take,” Weiser said. “Until the parties abandon the merger, walk away from it and say it won’t happen, the case is ready to be decided and we will continue to fight.”