The Colorado attorney general’s office will make its case against the merger of grocery store chains Kroger and Albertsons in court starting Monday as state attorneys will argue that consolidation of the two competitors would harm customers, employees and area farmers.
Colorado’s lawsuit in Denver District Court is one of three challenging the $24.6 billion deal that would combine two of the country’s largest grocers. A trial in Washington state’s lawsuit against the proposal is underway.
And a decision is expected in a trial in Oregon in which the Federal Trade Commission sued to block the merger until it can resolve its administrative proceeding against what it says would be the largest supermarket consolidation in U.S. history. The FTC is fighting the plan on grounds that it would drive up prices for millions of Americans and drive down competition.
The attorneys general of Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming joined the FTC’s lawsuit. Kroger is suing to stop the FTC’s administrative proceeding, saying it’s unconstitutional.
In Colorado, where Kroger owns King Soopers and City Market stores and Albertsons Cos. owns Safeway, the attorney general’s office said the grocers account for more than 50% of the market share and combining them would violate state antitrust laws. Attorney General Phil Weiser filed a lawsuit in February to oppose the merger after holding 19 town halls across the state to hear from the public.
“I can actually tell you in all of the 19 town halls and the hundreds of people who I got to hear from directly, not a single person said to me, ‘I think this merger is a good idea,’ ” Weiser said in an interview.
Instead, people were concerned about food prices going even higher if the supermarket chains team up, Weiser said. Employees fear losing their jobs and seeing stores close, as some did after Albertsons acquired Safeway in 2015.
Weiser said Colorado farmers who sell their produce to King Soopers and Albertsons worry that they’ll lose out if the companies consolidate. The two currently compete against each other for such popular fare as peaches grown in Palisade.
The United Food and Commercial Workers Local 7, which represents grocery workers in Colorado and Wyoming, is part of a coalition of unions fighting the merger, which was announced in 2022.
Kroger and Albertsons executives have said the merger will position them better to compete against such non-union grocery giants as Walmart and Costco and discount stores such as Dollar General.
“Albertsons Cos. merging with Kroger will expand competition, lower prices, increase associate wages, protect union jobs, and enhance customers’ shopping experience,” Albertsons said in an email. “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.”
Retail titan Walmart is the nation’s top grocer, accounting for about a quarter of the U.S. grocery sales in 2023 and bringing in roughly $505 billion. Kroger was second with approximately $148 billion in sales, followed by Costco and Albertsons.
But Weiser’s office said it found emails while going through documents that show the two companies view each other as competitors. His office is seeking a $1 million civil penalty from each grocer for what he called no-poach and non-solicitation agreements during a 2022 strike against King Soopers.
Colorado’s lawsuit said emails between Kroger and Albertsons executives outline agreements by Albertsons not to hire any King Soopers employees or solicit King Soopers pharmacy customers during the strike. The agreements were unlawful, according to the complaint.
“When the complaint came out, that was news. That was a big deal,” said Christine Bartholomew, a professor at the University of Buffalo School of Law who practiced antitrust law. “If the evidence backs that up, the argument that Kroger and Albertsons are making, which is ‘We’re not really competing against each other. It’s us against the Walmarts and the Dollar Generals of the world,’ becomes a little harder to accept.”
Kroger denied there were any non-solicitation or no-poach agreements.
“Kroger competes for talent in a broad and diverse labor market, including from non-grocery, non-union retailers like restaurants, food service companies, conveniences, warehouses and more. In fact, data shows that only 1-2.5% of Kroger associates come from and/or move to Albertsons,” Kroger said in an email.
Kroger owns 148 stores in Colorado and 2,700 nationwide. Albertsons has 105 stores in the state and about 2,200 across the country.
Consolidating the two chains would have a profound effect on Coloradans, the state’s lawsuit said.
“Combined, they would control more than half of the supermarket industry in Colorado. And in many local areas, the resulting impact would be even greater,” according to the lawsuit.
The trial is expected to take about two weeks.
Workers, communities, customers
In an effort to ease concerns about a merger’s impact on competition, Kroger and Albertsons said they’ll sell 579 of their stores to New Hampshire-based C&S Wholesale Grocers. The number of Colorado stores that would be unloaded is 91: two Albertsons, the rest under the Safeway banner.
Albertsons and Kroger executives said stores won’t be closed and frontline workers won’t lose their jobs if the merger is approved. Critics don’t buy the pledges.
“I was one of the victims of the 2015 merger where Albertsons bought Safeway,” said Tom Olson, who now works for UFCW Local 7.
Olson was the produce manager in a Safeway store in Lakewood when Albertsons acquired Safeway. He said 43 stores were closed in Colorado and because he had less seniority, he got bumped to a job that paid less.
Haggen Food and Pharmacy, a small supermarket chain based in Washington state, bought some of the stores and in less than a year filed for bankruptcy. Haggen closed more than 100 stores and laid off thousands of workers, The Associated Press reported.
Faye Guenther, president of UFCW Local 3000, which represents grocery workers in the Northwest, said she is afraid history will repeat itself if Kroger and Albertsons stores are sold to C&S. She said the company is a distributor, not a grocery store chain, and runs just a few groceries and pharmacies.
“We’re just very concerned about C&S being Haggen 2.0,” Guenther said.
Olson worries about the Safeway store in Golden where he last worked. “A lot of the customers walk to that store. If they don’t have reliable transportation and they close that store, how are those people going to get to the store? The next closest Safeway is 6 miles away.”
Olson also worries that union membership will decrease if C&S takes over stores and decides not to continue collective bargaining. “That will reduce our membership, endangering our pension and our health care,” he said.
Kroger has said the divestiture plan that all existing collective bargaining agreements will continue.
“C&S has only agreed to honor contracts until they expire. Our contracts start expiring in January,” Olson said.
Weiser said he sued to stop the merger out of concerns about the effects on workers, communities, customers and local suppliers. He heard from people who moved to other towns for work in the last round of closures who now worry they could lose their jobs again. Former grocery stores still sit empty in some neighborhoods.
And food deserts were created after the 2015 Albertsons-Safeway merger, Weiser said. The U.S. Department of Agriculture’s definition of a food desert considers the poverty rate and in an urban area applies when at least 500 people and/or at least 33% of the population lives more than 1 mile from a supermarket or large grocery store.
Denver’s Montbello neighborhood hasn’t had a full-service grocery store since the merger in 2015. Donna Garnett, the CEO of the Montbello Organizing Committee, said community members talked to several national grocery chains about opening a store. They were told the area didn’t meet the companies’ criteria, including education level, which relates to income levels.
The campaign to open a grocery store led to years of working on a $97 million project that includes affordable housing and a nonprofit grocery store expected to open in early 2025.
“It’s important to me that we were able to go directly to the people of Colorado, listen really hard and from that build a strong framework, build a strong foundation to go to court and fight this merger,” Weiser said.
Weiser is also planning a news conference Thursday morning to talk about the upcoming court proceeding.
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