Washington attorney general files lawsuit to block Kroger-Albertsons merger

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SEATTLE - A lawsuit aimed at halting the proposed merger of Kroger and Albertsons, the two largest supermarket companies in Washington state, has been filed by Attorney General Bob Ferguson. The merger, according to Ferguson, will drastically restrict consumer choices and eliminate critical competition that holds grocery prices in check.

The lawsuit, filed in King County Superior Court, calls for the nationwide merger of Kroger and Albertsons to be blocked. The merger would eradicate Kroger's closest competitor and decrease customer choice by significantly increasing the concentration of stores owned by the same company throughout Washington.

Ferguson argues that a proposal by Kroger and Albertsons to alleviate the impacts of their merger, which includes selling off more than 100 stores in Washington, doesn't change the fact that Kroger would still maintain a near-monopoly in many markets in the state. Furthermore, the plan to sell the stores to a company that is primarily a wholesale supplier could set many of the divested supermarkets up for failure, threatening Washington jobs and further reducing choices for Washington shoppers.

"This merger is bad for Washington shoppers and workers," Ferguson said. "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."

Even company executives have expressed concerns about the legality of the merger. One vice president with Albertsons mentioned that the merger is essentially creating a monopoly in grocery, which "makes no sense." An Albertson’s Human Resources director also noted that the merger is all about pricing and competition, and prices will not go down.

Kroger and Albertsons are the two largest supermarket chains in Washington and the second and fourth largest supermarket operators in the country. They currently employ over 700,000 individuals in nearly 5,000 stores across 49 states, with a combined annual revenue exceeding $200 billion.

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Currently, over half of all supermarkets in Washington state are owned either by Kroger or Albertsons, accounting for over 50% of all supermarket sales. This proposed merger would eliminate the competition between the two largest grocery operators in the state.

Kroger told FOX 13 that it was disappointed in the lawsuit while the merger is still under regulatory review.

"We are disappointed in Attorney General Ferguson’s premature decision to file a lawsuit while the merger is still under regulatory review. We remain in active and ongoing dialogue with the FTC and the other state Attorneys General.

"The merging parties will vigorously defend this in court because we care deeply about our customers and the communities we serve, and this merger will result in the best outcomes for Washington consumers.

"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. In contrast, Kroger and Albertsons Companies merging will bring lower prices to more customers, strengthen and create good-paying union jobs, and bring more fresh, affordable food to more communities."

The companies proposed to sell off 413 stores nationwide and some distribution and brand assets to diminish concerns about the new combined company’s market dominance. However, Ferguson asserts this plan doesn't do enough to address that dominance and could actually decrease competition.

Ferguson’s lawsuit seeks a permanent injunction blocking the merger nationwide.