Washington Attorney General Files Lawsuit to Block Kroger-Albertsons Mega-Merger

Washington state Attorney General Bob Ferguson speaks at a press conference outside the Federal Detention Center, as Washington state Gov. Jay Inslee (L) and Congresswoman Pramila Jayapal (R) listen, in SeaTac, Washington, on June 9, 2018. Karen Ducey/Getty Images

Washington’s attorney general, Bob Ferguson, has filed a lawsuit to block the proposed $25 billion merger of grocery giants Kroger and Albertsons, citing concerns over job losses, increased prices for consumers, and reduced competition in the market.

Kroger and Albertsons are the two largest supermarket chains in Washington and the second and fourth largest supermarket operators in the country. They currently have over 700,000 employees in nearly 5,000 stores across 49 states.

In a Jan. 15 statement, Mr. Ferguson said the merger would create a near-monopoly for the company in Washington.

In addition, he believes selling so many stores to Kroger, primarily a wholesale supplier, could set up many of the divested supermarkets to fail, endangering Washington jobs and further diminishing choices for Washington shoppers.

“This merger is bad for Washington shoppers and workers, free enterprise is built on companies competing, and that competition benefits consumers,” Mr. Ferguson said.

“Shoppers will have fewer choices and less competition, and without a competitive marketplace, they will pay higher prices at the grocery store. That’s not right, and this lawsuit seeks to stop this harmful merger,” he added.

Kroger and Albertsons have proposed to address potential concerns around the merger by selling off more than 100 stores in Washington. Mr. Ferguson rejected the idea, saying it would do nothing to prevent the company from having a near monopoly in the state.

Lawsuit Seeks to Block Merger Across the Country

The lawsuit, also filed on Jan. 15 in the King County Superior Court, seeks to block the merger of Kroger and Albertsons nationwide.

According to court documents, part of Mr. Ferguson’s legal argument against the merger rests on the Washington State Constitution, which he says expressly outlaws monopolies and trusts.

“Transactions that may substantially lessen competition or tend to create a monopoly in any line of commerce are so injurious to the public interest that the legislature has expressly declared them unlawful in the Washington Consumer Protection Act (CPA),” the court documents say.

Mr. Ferguson’s lawsuit asks the court to declare the merger violates Washington antitrust law and to issue an injunction permanently blocking the merger nationwide.

“The supermarkets monitor each other’s prices and adjust the cost of products as part of that competitive relationship,” Mr. Ferguson said.

“Albertsons’ Seattle Division, for example, has lowered its prices to compete with Fred Meyer and QFC, and highlighted in its advertisements products where it offers a better deal. The merger eliminates that competition.”

Kroger and Albertsons vowed to defend the proposed merger in court. In a joint media statement, the grocery giants said the merger would be the “best outcome for Washington consumers.”

“We are disappointed in Attorney General Ferguson’s premature decision to file a lawsuit while the merger is still under regulatory review,” the companies said.

“Blocking this merger would only serve to strengthen larger, non-unionized retailers like Walmart, Costco and Amazon by allowing them to maintain and increase their overwhelming and growing dominance of the grocery industry.”

Last year, a private lawsuit filed in California sought to block the merger as well. The lawsuit was filed on behalf of 25 consumers in states including California, Texas and Florida who alleged the merger “will be used to increase prices for groceries, decrease the quality of food, eliminate jobs, close stores and offer less choice for consumers.”