OLYMPIA, Wash. — Kroger and Albertsons, the parent companies for Fred Meyer and Safeway, plan to complete their merger in the first half of their fiscal year 2024.
Washington Attorney General Bob Ferguson, along with attorneys general for several other states and the Federal Trade Commission, have other plans.
Ferguson’s office filed a lawsuit in King County Superior Court on Monday, arguing the proposed merger would create a monopoly that would hurt Washington consumers and grocery store workers.
“The future is, frankly, dark if the merger goes forward,” Ferguson said. “These are the two largest supermarkets in the state of Washington. This is where the majority of Washingtons go get their groceries. One thing I know is bad for workers and bad for consumers is a monopoly.”
Ferguson argued a new monopoly would cause price increases and could result in a loss of grocery store jobs.
Following a press conference on Monday when Ferguson announced the lawsuit, Kroger, Albertsons and C&S Wholesale released a joint statement pushing back against claims that the merger would create a lawsuit.
C&S Wholesale is the company Kroger and Albertsons have said would be the recipient of stores they plan to sell off to avoid creating a monopoly in the eyes of the law.
Ferguson doesn’t think that divestiture would help and may actively strengthen a grocery monopoly over time.
“(C&S Wholesale) currently owns… 23 grocery stores in the entire country. This is not a company that’s equipped to handle competing with a merged Kroger and Albertsons,” Ferguson said. “They’d go from 23 to adding 104, just in Washington… In a couple years, that company is going to go bankrupt and Kroger and Albertsons, now merged, will acquire that ‘competition.'”
Ferguson further draws a parallel to Albertsons’ previous divestment of stores to Washington-based Haggen, which Albertsons acquired in 2015.
Beyond the chains’ joint statement, Kroger argued the merger would result in lower prices.
The Attorney General’s Office has to demonstrate the opposite is true in court, something Ferguson said he’s confident his antitrust team can do. Ferguson doesn’t think the underlying concept is complicated.
“Antitrust law may be complex in a certain way, but the basis of it is easily understood by everybody,” Ferguson explained. “Competition is the basis for our entire system. We depend on it. Without competition the end result is bad for individuals, bad for consumers.”
Kroger and Albertsons own more than half of all groceries stores in Washington. Even with that strength, the grocers have argued the merger is necessary to compete against less traditional rivals, like Costco, Amazon and Walmart.
But Ferguson’s office cited some evidence in their lawsuit that some in Albertsons leadership know this would result in an illegal monopoly.
Amid rumors of the proposed merger, a vice president with Albertsons wrote that “you are basically creating a monopoly in grocery with the merger,” according to the lawsuit.
