Kroger-Albertsons merger delayed following suit by Washington AG to block union
The proposed deal, worth $24.6bn, would bring together the two largest supermarket chains which currently operate nearly 5,000 stores and employ about 720,000 people, which Kroger says it will protect and enhance post-merger in a bid to better compete against mass and club outlets, including Costco, Walmart and Amazon – all of which have grown quickly post-pandemic as consumers seek increased value and convenience.
Not only does Kroger say it is “committed to protecting good-paying union jobs, with no store closures or frontline associates laid off as a result of the merger,” the company adds in a joint-statement released with Albertsons yesterday that it will invest “an incremental $1bn to raise wages and comprehensive benefits for all associates post-close” and offer added benefits, including financial support for continuing education.
In addition, Kroger and Albertsons argue the merger will “result in more opportunities to invest in communities across the US” and expand Kroger’s existing mission “to create neighborhoods free from hunger and food waste,” according to the statement.
Washington AG: Merger would result in ‘fewer choices and less competition’
Washington AG Bob Ferguson is dubious of these claims, however, and filed a lawsuit in King County Superior Court to block the merger.
He argues that if the companies merge, Washington state consumers would ultimately pay the price because they would have “fewer choices and less competition.”
He points out that more than 100 stores in Washington are on the chopping block as part of an agreement by Kroger and Albertsons to assuage antitrust concerns. Last fall, the companies agreed to sell more than 400 stores and other assets for $1.9bn prior to a merger to C&S Wholesale Grocers, which would become the second-largest supermarket operator in Washington “nearly overnight” if the merger succeeds.
“This merger is bad for Washington shoppers and workers,” Ferguson said in a statement. “Free enterprise is built on companies competing, and that competition benefits consumers. 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.”
Kroger: ‘Our merger with Albertsons … will result in the best outcomes for customers’
Kroger and Albertsons countered in their statement that the merger “will mean lower prices and more choices for more consumers.
They point to a commitment by Kroger to invest $500m to reduce prices and an “incremental $1.3bn to enhance the customer experience,” which they say in the statement will result in “more fresh, affordable food” for more people and communities.
“We believe our merger with Albertsons and the comprehensive divestiture to C&S will result in the best outcomes for customers, associates and our communities,” Kroger said. “We remain committed to closing the transaction and providing the meaningful and measurable benefits that we promised when we originally announced the transaction.”
