Trial starts Monday for Colorado lawsuit attempting to block Kroger-Albertsons merger

A Colorado lawsuit seeking to block Kroger and Albertsons from merging heads to trial Monday as the supermarket giants fight to keep the deal alive amid staunch opposition.

The $25-billion transaction, announced in 2022, would be the largest supermarket merger in U.S. history. The transaction has faced numerous legal challenges at both the state and federal level from regulators and public officials who say it would hurt shoppers and workers by eliminating competition and raising prices.

Kroger operates 148 King Soopers and City Market stores in Colorado and is the largest grocery chain in the state. Albertsons has 105 Safeway and Albertsons stores and is the third largest grocery seller in the state. The companies argue the merger is necessary to compete with big box stores like Walmart.

“This merger would concentrate a market and create a mega grocery store that would be able to raise prices, have less variety, have fewer stores, offer less local food, less customer service,” Colorado attorney general Phil Weiser said during a conference call with reporters this week. “These two chains monitor each other’s prices, and when there’s a lack of competition, prices go up.”

The trial in Denver district court is starting the week after closing arguments from the Federal Trade Commission at a district court in Portland, Oregon. The FTC is seeking a preliminary injunction to block the deal while its complaint goes before an in-house administrative law judge. The attorneys general of Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming all joined the FTC’s lawsuit. Separately, Washington state is also in court arguing to block the deal. In July, a judge ordered a temporary halt to the merger while the Colorado case is being argued and decided.

Kroger and Albertsons agreed to sell 579 stores nationwide to C&S Wholesale Grocers, a New Hampshire-based company, to address concerns the combined company will create a monopoly in areas with significant overlap The divestiture plan covers 91 stores in Colorado including most of the state’s Safeway and Albertsons locations, as well as two distribution centers and a dairy farm.

In theory, selling to C&S, which operates Piggly Wiggly in the Southeast and Midwest, means there won’t be store closures or layoffs. C&S has said no stores will close as a result of the merger, and that all frontline associates will keep their jobs.  

But a similar solution collapsed when Albertsons merged with Safeway in 2015. The buyer in that instance, Haggen, went bankrupt less than a year after the sale. In the aftermath, Albertsons bought back many of the stores it had just sold.

“That was a disaster. We do not want that disaster to happen again,” Weiser said. “C&S is a national distribution company. It operates very few stores. It doesn’t have the infrastructure or the platform to do so, and we’re worried about a repeat of what we saw last time.”

The Colorado lawsuit is expected to last roughly three weeks. It’s not clear which lawsuit — the state’s or the federal one — will be resolved first.  

“That is going to be a really interesting mystery because there’s no way to really know how long each judge is going to take,” Weiser said. “Until and unless the parties abandon the merger, walk away from it, say it's not going to happen, this case is ripe for decision and we're going to keep fighting.”