Washington state has launched a legal battle to prevent a proposed $24.6 billion merger between supermarket giants Albertsons and Kroger, arguing that the consolidation would lead to higher grocery prices for consumers, the Associated Press reports.
State officials claim that if the two companies merge, shoppers could face hundreds of millions of dollars in additional grocery costs annually due to reduced competition between the chains.
Kroger and Albertsons, which own more than 300 stores in Washington and control over half of the state’s grocery sales, argue that the merger would enable them to better compete with larger retailers like Walmart, Costco, and Amazon. According to Kroger attorney Mark Perry, the consolidation would strengthen the two companies as they face significant competitive pressure from these dominant market players.
“This is the real competition… The evidence will establish that Kroger and Albertsons do face an existential threat from these behemoths, and that this merger is their response to that threat,” Perry said during opening arguments in King County Superior Court in Seattle.
However, Washington’s attorney Glenn Pomerantz disputes this claim, arguing that Albertsons and Kroger already dominate the local grocery market. He noted that many areas in the state, including Seattle, lack Walmart stores, making Kroger and Albertsons the primary competitors.
“There is no existential threat going on here. There is just healthy competition… Kroger and Albertsons don’t need to merge to be successful. They’re already successful,” Pomerantz said.
Washington’s lawsuit is one of three cases challenging the merger. The Federal Trade Commission is also fighting the merger in federal court in Oregon, and Colorado has filed a lawsuit to block the deal as well. Washington’s case seeks to halt the merger nationwide, while Kroger and Albertsons argue that no single state should have the power to stop a national deal.
In an attempt to address regulatory concerns, the two companies have proposed selling 579 stores in regions where they have overlapping markets, with 124 of those stores located in Washington. The stores would be sold to C&S Wholesale Grocers, a company that currently operates a limited number of stores and pharmacies. Washington officials are skeptical of the proposal, questioning C&S’s ability to successfully run so many stores. Pomerantz pointed to a past grocery merger in Washington as a cautionary example: when Albertsons acquired Safeway in 2014, it sold stores to the small Haggen chain to satisfy regulators. However, Haggen struggled with the expansion and eventually closed most of its stores, with many of them later reacquired by Albertsons.
Despite reassurances from Kroger that this merger would be different, some Washington residents remain unconvinced. Tina McKim, a member of Birchwood Food Desert Fighters, recalled how Albertsons closed a store in her Bellingham neighborhood, leaving many without convenient access to fresh food. She worries that similar closures could occur if the merger proceeds, potentially exacerbating food deserts in vulnerable communities.
