The proposed merger between the Albertsons and Kroger grocery chains, which would have resulted in the sale of the Kroger-owned Safeway at 1635 E. Cottonwood Street in Cottonwood, all four Prescott-area Safeway stores and all three Flagstaff Safeway stores to C&S Wholesale Grocers LLC as part of Kroger’s divestiture plan, has collapsed after judges in Washington and Oregon blocked the merger on Tuesday, Dec. 10.
Judge Adrienne Nelson of the U.S. District Court for the District of Oregon granted the Federal Trade Commission’s request for a preliminary injunction to prevent the merger. Nine state attorney generals, including Arizona Attorney General Kris Mayes, a Democrat elected in 2022, joined the FTC’s suit.
“Today’s decision by a federal judge to extend the preliminary injunction blocking the $24.6 billion Kroger-Albertsons merger is a major victory for consumers, workers and small businesses across the country,” Mayes said on Dec. 10. “Should Kroger and Albertsons attempt to move forward with further legal proceedings, I am confident that the result will not change, just as the judge noted.”
In Washington, King County Superior Court Judge Marshall Ferguson ruled that the merger violated Washington antitrust law.
“In my view, the evidence convincingly shows that the current competition between Kroger and Albertsons stores is fierce in the state of Washington,” Ferguson said during the hearing. “By contrast, the divestiture buyer, C&S Wholesale, with its limited retail experience, will not be able to replicate the ferocity of that competition or compete in Washington against the colossus of a merged Kroger and Albertsons.”
In a separate case, Washington v. Kroger et al, Ferguson also ruled the same day that “the evidence on the merits shows that the merger harms the public interest by creating anticompetitive effects likely to result in higher prices and reduced quality.”
Colorado Attorney General Phil Weiser had filed a separate lawsuit in February to block the merger that would only have affected stores in Colorado.
“Given the recent federal and state court decisions to block our proposed merger with Kroger, we have made the difficult decision to terminate the merger agreement. We are deeply disappointed in the courts’ decisions,” Albertsons Companies CEO Vivek Sankaran said in a statement on Wednesday, Dec. 11.
“This historic win protects millions of Americans across the country from higher prices for essential groceries,” FTC Bureau of Competition Director Henry Liu said in a statement.
Lawsuit
Albertsons also announced on Dec. 11 that the company has filed a lawsuit against The Kroger Co. in the Delaware Court of Chancery seeking “an immediate $600 million termination fee” along with billions of dollars in damages.
“Kroger willfully breached the merger agreement in several key ways, including by repeatedly refusing to divest assets necessary for antitrust approval, ignoring regulators’ feedback, rejecting stronger divestiture buyers and failing to cooperate with Albertsons,” Albertsons staff stated in a press release.
“This is clearly an attempt to deflect responsibility following Kroger’s written notification of Albertsons’ multiple breaches of the agreement, and to seek payment of the merger’s break fee, to which they are not entitled,” Kroger wrote in a statement that termed the claims “baseless and without merit.”
Kroger subsequently announced that it will commence a new $7.5 billion stock buyback plan after it paused buybacks after the proposed merger was announced in October 2022.
