A Colorado judge has issued an order temporarily blocking the proposed $24.6 billion merger between the nation’s two largest supermarket chains ahead of an antitrust trial in state court set to begin in September.
Colorado Attorney General Phil Weiser in February sued to block the merger between grocery giant Kroger, which operates King Soopers and City Market stores in Colorado, and Albertsons, which operates the Safeway brand. Weiser’s suit alleges that the deal violates state antitrust laws and would have “harmful impacts on consumers, workers, 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, barring the two companies from completing their deal before a ruling is issued in the case.
“Based on the evidence presented by the State in its Motion and the Joint Stipulation, the Court finds there is a reasonable probability that the State will prove its claims against Defendants at trial,” Luxen wrote in his order.
Hearings on Weiser’s request for a preliminary injunction was scheduled to begin Aug. 12. The companies agreed to the temporary injunction “to conserve judicial and party resources,” according to a stipulation filed with the court Wednesday, and the case will instead proceed to trial in the fall.
“I am pleased that Kroger and Albertsons agreed to halt their plans to merge until the court rules on the state’s lawsuit 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 megamerger will not go into effect during harvest season and while kids are headed back to school.”
Kroger, based in Ohio, operates more than 2,700 stores and Albertsons, based in Idaho, operates more than 2,200 stores across the country. Kroger’s proposed acquisition of Albertsons, one of the largest retail mergers ever proposed, has been opposed by labor unions and consumer advocates who fear that the consolidation could lead to higher prices and decreased wages and bargaining power for workers.
The companies last month detailed a divestiture plan in which they propose to sell 579 locations nationwide — including 91 Safeway stores in Colorado — to New Hampshire-based C&S Wholesale Grocers, in a bid to allay antitrust concerns. But critics of the plan paint C&S, a supplier that currently operates just 23 retail locations nationwide, as a struggling company with shaky finances, unequipped to operate 579 newly acquired stores as an “effective competitor” to the merged Kroger-Albertsons behemoth.
“We cannot entrust our grocery stores — which are integral to our communities and our workers — to the untested, inexperienced C&S Wholesale Grocers,” United Food and Commercial Workers Local 7 President Kim Cordova, whose union represents more than 23,000 King Soopers and Safeway workers in Colorado and Wyoming, said in a statement earlier this month.
In addition to 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 Colorado King Soopers stores: “no-poach” and “non-solicitation” deals in which Albertsons agreed not to hire striking King Soopers employees or to attract King Soopers pharmacy customers.
A two-week trial in the Colorado case is scheduled to begin Sept. 30.
“My office looks forward to making the case that this merger will eliminate competition and impact food prices, jobs, and consumer choice,” Weiser said.
This story was originally published by the Colorado Newsline which is part of States Newsroom, a nonprofit news network, including the Daily Montanan, supported by grants and a coalition of donors as a 501c(3) public charity.
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