Attorney General Bob Ferguson sued to block the proposed Kroger-Albertsons grocery merger. Ferguson asserts the proposed merger of the two largest supermarket companies in Washington state will severely limit shopping options for consumers and eliminate vital competition that keeps grocery prices low.
In a press release, Ferguson stated that a proposal by Kroger and Albertsons to mitigate the impacts of their merger, which includes selling off more than 100 stores in Washington, does not change the fact that Kroger would still enjoy a near-monopoly in many markets in the state.
In addition, the plan to sell the stores to a company that is primarily a wholesale supplier could set up many of the divested supermarkets to fail, endangering Washington jobs and further diminishing choices for Washington shoppers.
The Case Against Kroger-Albertsons Merger
“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; 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.”
The lawsuit, filed on Monday, January 15, 2024, in King County Superior Court, seeks to block the merger of Kroger and Albertsons nationwide.
Ferguson asserts the merger eliminates Kroger’s closest competitor and decreases customer choice by significantly increasing the concentration of stores owned by the same company throughout Washington.
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According to the Attorney General, even company executives have expressed that the merger might be illegal. After rumors of the proposed merger surfaced, a vice president with Albertsons wrote that “you are basically creating a monopoly in grocery with the merger… [it] makes no sense.”
Kroger and Albertsons are the two largest supermarket chains in Washington. Collectively, Kroger and Albertsons operate more than 300 supermarkets in Washington, including approximately 194 in the Seattle-Tacoma-Bellevue metropolitan area.
They currently have more than 700,000 employees in nearly 5,000 stores across 49 states. They have combined annual revenue in excess of $200 billion. Kroger alone has more than 21,000 workers in Washington.
Kroger and Albertsons own more than half of Washington supermarkets
More than half of all supermarkets in Washington state are currently owned by either Kroger or Albertsons, and they account for more than 50% of all supermarket sales in the state, according to the lawsuit.
Albertsons owns Safeway and Haggen, while Kroger owns QFC and Fred Meyer. Collectively, Kroger and Albertsons operate more than 300 supermarkets in Washington, including approximately 194 in the Seattle-Tacoma-Bellevue metropolitan area.
The proposed merger will eliminate head-to-head competition between the two largest grocery operators in the state, said Ferguson.
In late August 2023, the companies proposed to sell off 413 stores nationwide -104 in Washington- plus some distribution and brand assets to diminish concerns about the new combined company’s market dominance.
The stores would be sold to C&S Wholesale Grocers, a wholesale distributor that does not currently operate supermarkets in Washington. If the merger succeeds, C&S would become the second-largest supermarket operator in the state nearly overnight.
Ferguson’s lawsuit asks the court to find that the merger violates Washington antitrust law and to issue an injunction permanently blocking the merger nationwide.