Washington’s state attorney general is attempting to stand in the best way of the proposed merger between Kroger Co. and Albertsons with a brand new lawsuit.
State attorney general Bob Ferguson filed a lawsuit in King County Superior Court in an try to block the deal, The Seattle Times first reported.
The 2 grocery retailers first proposed the deal in 2022. Kroger was slated to purchase Albertsons for $24.6 billion, pending regulatory approval. The merger would allow the chains to create a “premier omnichannel food retailer,” Kroger said in an announcement on the time.
Kroger is No. 8 within the Top 1000, Digital Commerce 360’s rating of North America’s leading retailers by online sales. Albertsons ranks No. 26. The 2 chains also make up the primary and second largest retailers within 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 mix the 2 largest — and, in some areas, the one — supermarkets in lots of communities across Washington, which is prone to result in higher prices, lower quality, and fewer variety in lots of local markets throughout Washington,” the lawsuit reads.
Kroger and Albertsons are the 2 largest grocery chains in Washington. With greater than 300 combined locations within the state, together they account for greater than 50% of total grocery sales.
“This merger is bad for Washington shoppers and employees,” Ferguson said. “Free enterprise is built on firms competing, and that competition advantages consumers. Shoppers may have fewer selections and fewer competition, and, with out a competitive marketplace, they may pay higher prices on the food market. 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 reply to the lawsuit
The 2 retailers released a joint statement regarding the lawsuit.
“We’re disenchanted in Attorney General Ferguson’s premature decision to file a lawsuit while the merger continues to be under regulatory review. We remain in lively and ongoing dialogue with the FTC and the opposite 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 lead to one of the best outcomes for Washington consumers,” the statement continues. Kroger CEO Roger McMullen previously promised to fight for the merger in court if obligatory.
“Blocking this merger would only serve to strengthen larger, non-unionized retailers like Walmart, Costco and Amazon, by allowing them to keep up and increase their overwhelming and growing dominance of the grocery industry. In contrast, Kroger and Albertsons Firms merging will bring lower prices to more customers, strengthen and create good-paying union jobs, and produce more fresh, reasonably priced food to more communities” Kroger and Albertsons said.
Amazon, Walmart and Costco and rank No. 1, No. 2, and No. 6, respectively, within the Top 1000. Digital Commerce 360 categorizes them as mass merchants, somewhat than food and beverage retailers.
Staff at Kroger and Albertsons are unionized with The United Food and Industrial Staff International Union (UFCW). The UFCW voted in May to oppose the merger.
The state of online grocery sales
U.S. online grocery sales declined barely in 2023, in line with 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 each grew digital sales of their most up-to-date fiscal quarters. Kroger grew online sales 11% yr over yr 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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