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What to know before the Colorado lawsuit aimed at blocking the Kroger-Albertsons merger | News

Posted on by darion

The fate of the Kroger and Albertsons grocery merger will be heard in court on Monday. Again.

The trial in a case brought by Colorado against the parent companies that run King Soopers and Safeway stores across the state will begin Monday, the beginning of a third lawsuit aimed at blocking the proposed $25 billion deal.

In Colorado, Kroger operates 148 King Soopers and City Market stores, while Albertsons operates 105 Safeway and Albertsons stores.

The Federal Trade Commission’s antitrust case against grocery stores went to trial in Oregon and ended on September 17 after a three-week trial. It’s still unclear when an Oregon judge will rule on the case.

The next trial in Washington state began on September 16.

“We are now prepared for what we believe will end this merger and prevent it from harming Colorado,” Colorado Attorney General Phil Weiser said at a news conference Thursday.

Colorado AG sues to block Kroger-Albertsons merger

A Kroger spokesman told the Denver Gazette in an email that the retailer is prepared to argue why the merger is necessary.

“We look forward to making our case for why Kroger must grow, adapt and, most importantly, continue to lower prices to compete with global giants like Walmart, Costco and Amazon,” the statement said.

Here’s what you need to know before going to trial in Colorado in Denver District Court.

Why is Colorado suing Kroger and Albertsons?

In February, the state filed a lawsuit against Kroger and Albertsons, claiming the proposed merger violated Colorado antitrust laws and would reduce competition in the grocery industry statewide.

The state’s attorney general said the deal would further concentrate Colorado’s grocery market, creating a “mega grocer” that could raise prices, offer a smaller variety of local products and lead to store closures.

“We’re dealing with a situation that’s already not great and we’re afraid it’s going to get worse,” Weiser said.

He cited the concerns of Palisade peach growers, who distribute to both King Soopers and Safeway, and said they were concerned about selling their fruit at a competitive price or customers being able to find other types of local produce at a competitive price.

“It’s not enough to have Walmart as an alternative. “Walmart doesn’t carry the same type of local food,” Weiser said.

Why Colorado Safeway stores won’t be run by Kroger if the merger happens

The state also argues that Kroger and Albertsons’ plan to divest 91 stores in the state under the Safeway banner to C&S Wholesale Grocers would result in store closures, arguing that it is a distributor and not a retailer with enough experience to operate the stores, citing a failed Albertsons’ decision to sell shares to Haggen in 2015, when it merged with Safeway, set a precedent.

Kroger and Albertsons have repeatedly affirmed C&S Wholesale’s ability to successfully operate stores.

The state also maintains that King Soopers and Safeway entered into an illegal “no-poach agreement” intended to prevent striking unionized workers from taking each other’s jobs at each other’s stores, which the grocers deny.







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FILE PHOTO: A customer leaves the King Soopers grocery store on Capitol Hill in Denver.






What is the trader’s defense?

Like the FTC lawsuit, Kroger aims to prove how much the grocery landscape has changed with the rise of supermarkets and online retailers like Walmart and Amazon.

The retailer has repeatedly said it will reduce prices on “day one” of the merger. Weiser expressed concerns that these are “paper promises” that are unenforceable.

In response, a Kroger spokesman said customers would hold stores accountable if prices did not drop.

“These are not just commitments on paper, but statements that several executives testified under oath,” a spokesman said Friday. “More importantly, customers will hold Kroger accountable if it does not lower prices at Albertsons stores after the merger closes. They care about what prices are on the shelf and can show it immediately – by moving on to the next store.”

The spokesperson added that Weiser’s attempted blockade will prevent Kroger from lowering prices in the state because the merger will give Kroger more purchasing power when combined with Albertsons.

United Food and Commercial Workers (UFCW) Local 7 sided with the Attorney General, expressing concern that some stores could close and workers could be laid off.







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FILE PHOTO: Bryan Morton with E & J Gallo Winery helps stock up on wine Wednesday morning, March 1, 2023, at the Safeway grocery store on South Havana Street in Aurora, Colorado (Timothy Hurst/Denver Gazette)






How is this trial different? What if others finish first?

With two other cases pending, Weiser expressed doubt that either case would end before the Colorado case ends on Oct. 18.

Even if that happens, he said, the cases could end up in an appellate court.

Weiser said the state will continue to block the merger until the deal falls apart.

“Until the parties withdraw from the merger or until the court stops the merger and the parties accept the court’s ruling, we have work to do,” Weiser said.

Kroger plans to sell the Safeway brand in Colorado to help secure its merger with Albertsons

While there may be many intersections with the FTC and Washington trails, Weiser emphasized why the state pursued its own cause: He believes the merger could have local impacts on Colorado — especially in more rural parts of the state.

During one pretrial hearing, a U.S. District Court judge in Denver rejected two potential state witnesses, Gunnison and Canon City officials concerned about the merger, because they were added to the list of potential witnesses late and state attorneys said they had other witnesses on their list along with from similar accounts.

“This case matters. This is of great importance to Colorado. We do not take this step lightly.” Weiser said. “Colorado has never filed an antitrust case to stop the merger in state court and has not litigated the matter. We’re doing it now and we’re doing it because it matters.”