Kroger’s bid to dismiss Colorado lawsuit against Albertsons merger denied
A bid by Kroger to dismiss a lawsuit in the state of Colorado seeking to halt its $24.6 billion merger with Albertsons has been denied. The court there believes that since Kroger does business in the state, it is responsible for upholding its monopoly laws.
For its part, Kroger argued that Colorado’s case against it is redundant because it is already facing a similar lawsuit at the federal level. The court, however, disagreed, saying that dismissing the case "would be at odds with numerous rulings recognizing states as co-equal antitrust enforcers.”
In February, Colorado Attorney General Phil Weiser filed the lawsuit in Denver District Court to block the merger. According to the lawsuit, the merger would eliminate head-to-head competition between Kroger and Albertsons and consolidate an already concentrated market.
Kroger operates more than 140 King Soopers and City Market stores, while Albertsons runs 100-plus Safeway and Albertsons stores in the state. At the end of March, Denver District Court Judge Andrew Luxen set a date of Aug. 12 to begin hearing arguments in the Colorado lawsuit.
[Read more: Albertsons partners with Grubhub for nationwide grocery delivery]
“Coloradans are concerned about undue consolidation and its harmful impacts on consumers, workers and suppliers,” said Weiser at the time. “After 19 town halls across the state, I am convinced that Coloradans think this merger between the two supermarket chains would lead to stores closing, higher prices, fewer jobs, worse customer service and less resilient supply chains."
Weiser also claimed that Kroger and Albertsons’ divestiture proposal with C&S Wholesale Grocers is inadequate because it wouldn’t alleviate the anticompetitive effects of the merger. Weiser said C&S has insufficient retail grocery experience to take on a divestiture of this size, there aren't enough stores to allow C&S to effectively compete with Kroger post-merger the way that Albertsons does today, and a transition agreement makes C&S reliant on Kroger for up to two years for pricing, pharmacy, promotions, loyalty programs and IT infrastructure, diminishing competition between the companies.
A hearing date of Aug. 26 was set by Judge Adrienne Nelson of the U.S. District Court for the District of Oregon regarding the FTC’s request for a preliminary injunction against the merger. The August hearing date will come exactly six months after the FTC filed suit to halt the merger and divestiture plan, claiming that the move "falls far short of mitigating the lost competition between Kroger and Albertsons" and would increase grocery prices for millions of Americans.
[Read more: Kroger reports Q1 results]
Kroger remains committed to the merger and is ready to defend itself in court. “We are prepared to defend our merger because it will produce meaningful and measurable benefits for customers, for associates, and for communities across the country,” said Kroger CEO Rodney McMullen during the company’s Q1 earnings call. “Customers will benefit from lower prices and more choices following the merger close.”
This story originally appeared on Progressive Grocer.
