Colorado judge temporarily blocks ‘mega-merger’ of Kroger-Albertsons supermarkets

The U.S. Federal Trade Commission and Washington Attorney General Bob Ferguson have also challenged the supermarket merger in court

A Colorado judge has issued an injunction temporarily blocking the proposed $24.6 billion merger between the nation’s two largest supermarket chains pending an antimonopoly trial in state court set to begin in September.

Colorado Attorney General Phil Weiser filed a lawsuit in February to block the merger between supermarket giant Kroger, which operates King Soopers and City Market stores in Colorado, and Albertsons, which operates the Safeway brand. Weiser’s lawsuit alleges that the deal violates the state’s antitrust laws and would have “harmful consequences for consumers, employees and suppliers.” The U.S. Federal Trade Commission and Washington Attorney General Bob Ferguson have also challenged the merger in court.

Denver District Court Judge Andrew Luxen on Thursday granted Weiser’s request for a preliminary injunction against the merger, preventing the two companies from completing their deal until a ruling is reached in the case.

“Based on the evidence presented by the State in its motion and the joint agreement, the court finds that there is a reasonable likelihood that the State will prove its claims against Defendants at trial,” Luxen wrote in his order.

Supermarket chains agree to temporary provision

Hearings on Weiser’s request for a preliminary injunction were set to begin Aug. 12. The companies agreed to the temporary injunction “to preserve judicial and party resources,” according to a stipulation filed with the court Wednesday, and the case will instead go to trial in the fall.

“I am pleased that Kroger and Albertsons have agreed to halt their merger plans until the court rules on the state’s lawsuit seeking to permanently block the grocery merger,” Weiser said in a statement. “This is great news for shoppers, workers, farmers and other suppliers, who can rest assured that this mega-merger will not go into effect during harvest season and while kids are back in school.”

Kroger, based in Ohio, operates more than 2,700 stores, and Albertsons, based in Idaho, operates more than 2,200 stores nationwide. Kroger’s proposed acquisition of Albertsons, one of the largest retail mergers ever proposed, has been opposed by labor unions and consumer groups who fear the consolidation could lead to higher prices and lower wages and bargaining power for workers.

The companies last month outlined a divestiture plan in which they propose selling 579 locations nationwide — including 91 Safeway stores in Colorado — to New Hampshire-based C&S Wholesale Grocers in an effort to assuage antitrust concerns. But critics of the plan portray C&S, a supplier that currently operates just 23 stores nationwide, as a struggling company with shaky finances, ill-equipped to operate 579 newly acquired stores as an “effective competitor” to the merged Kroger-Albertsons giant.

“We cannot entrust our grocery stores, which are essential to our communities and our workers, to the untested, inexperienced C&S Wholesale Grocers,” Kim Cordova, president of United Food and Commercial Workers Local 7, whose union represents more than 23,000 King Soopers and Safeway workers in Colorado and Wyoming, said in a statement earlier this month.

Among other antitrust concerns, Weiser’s yearlong investigation into the merger uncovered evidence of alleged collusion between Kroger and Albertsons during a January 2022 strike by UCFW Local 7 workers at King Soopers stores in Colorado: “no-poach” and “non-solicitation” deals in which Albertsons agreed not to hire striking King Soopers workers or solicit customers from the King Soopers pharmacy.

The two-week trial in the Colorado case is expected to begin on September 30.

“My office looks forward to arguing that this merger will eliminate competition and impact food prices, jobs and consumer choice,” Weiser said.

Colorado Newsline, is, like the Idaho Capital Sun, part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity.

This story was written by Chase Woodruff of the Colorado Newsline, part of the States Newsroom.