Washington’s state attorney general is trying to stand in the way of the proposed merger between Kroger Co. and Albertsons with a new lawsuit.
State attorney general Bob Ferguson filed a lawsuit in King County Superior Court in an attempt to block the deal, The Seattle Times first reported.
The two grocery retailers first proposed the deal in 2022. Kroger was slated to buy Albertsons for $24.6 billion, pending regulatory approval. The merger would allow the chains to create a “premier omnichannel food retailer,” Kroger said in a statement at the time.
Kroger is No. 8 in the Top 1000, Digital Commerce 360’s ranking of North America’s leading retailers by online sales. Albertsons ranks No. 26. The two chains also make up the first and second largest retailers in the food and beverage category of the Top 1000.
Why is the attorney general suing to stop the merger?
Ferguson says the merger would give Kroger a near-monopoly in Washington.
“The Proposed Transaction would combine the two largest — and, in some areas, the only — supermarkets in many communities across Washington, which is likely to lead to higher prices, lower quality, and less variety in many local markets throughout Washington,” the lawsuit reads.
Kroger and Albertsons are the two largest grocery chains in Washington. With more than 300 combined locations in the state, together they account for more than 50% of total grocery sales.
“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.”
Kroger and Albertsons previously agreed to sell 100 stores in Washington in hopes of gaining regulatory approval. That’s not enough to offset the impact of the merger on Washington consumers, the lawsuit says, calling the move “woefully inadequate.”
Kroger and Albertsons respond to the lawsuit
The two retailers released a joint statement regarding the lawsuit.
“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,” they said in an emailed statement.
“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,” the statement continues. Kroger CEO Roger McMullen previously promised to fight for the merger in court if necessary.
“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” Kroger and Albertsons said.
Amazon, Walmart and Costco and rank No. 1, No. 2, and No. 6, respectively, in the Top 1000. Digital Commerce 360 categorizes them as mass merchants, rather than food and beverage retailers.
The state of online grocery sales
U.S. online grocery sales declined slightly in 2023, according to annualized results from the monthly Brick Meets Click/Mercatus Grocery Shopper Survey. Sales totaled $95.8 billion, $97.0 billion in 2022 and $97.6 billion in 2021.
Meanwhile, Kroger and Albertsons both grew digital sales in their most recent fiscal quarters. Kroger grew online sales 11% year over year in its third quarter ended Nov. 4, 2023. Albertsons grew its online sales 19% in its second quarter ended Sept. 9.
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