Workers and community members form a picket line outside a Denver King Soopers, after United Food and Commercial Workers Local 7 began a strike over stalled labor negotiations on Jan. 12, 2021. (Chase Woodruff/Colorado Newsline)
The Colorado attorney general’s legal effort to stop the merger between grocery chains Kroger and Albertsons moves to the trial phase Monday.
In a press conference ahead of the trial in Denver district court, Colorado Attorney General Phil Weiser said the case will focus on the consequences Coloradans would face if the merger were to go through. The lawsuit he filed in February seeks to block an almost $35 billion merger between grocery giant Kroger, which operates King Soopers and City Market stores in Colorado, and Albertsons, which operates the Safeway brand.
The Colorado suit alleges the deal violates state antitrust laws and would have “harmful impacts on consumers, workers, and suppliers,” including Colorado farmers, Weiser said. He said the state is prepared “for what we believe will be the case that will end this merger and will prevent it from harming Coloradans.”
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Weiser said the merger would exacerbate the already concentrated grocery market in Colorado, resulting in higher prices, less variety, less local food and fewer stores. He said he heard concerns about these outcomes from Coloradans during 19 town halls conducted across the state — over 6,000 people shared their input on the merger and how it would affect their communities.
“The feedback was clear. It was consistent,” Weiser said. “Coloradans are concerned about this merger, about food deserts, about a lack of choices, about a lack of competition. Many said to me, ‘I look every week and I see what’s on sale in which supermarket, and I go there, and I’m worried about having to pay more.’”
In Gunnison, for example, where the only two grocery stores are a City Market and a Safeway, Weiser said a consumer would have to drive 65 miles to either Salida or Montrose for another option if those markets merge.
Alleged collusion
A Denver district court judge granted Weiser’s request for a preliminary injunction in July, barring the companies from completing the merger before a ruling is announced. The Federal Trade Commission also filed a lawsuit to block the merger, and Weiser and Washington Attorney General Bob Ferguson pursued lawsuits within their own states. The judge in the federal lawsuit is expected to issue a ruling sometime in the coming months.
Kroger, based in Ohio, operates more than 2,700 stores and Albertsons, based in Idaho, operates more than 2,200 stores across the country.
Weiser said the trial starting Monday will include Colorado-specific evidence. It also will seek civil penalties related to alleged collusion between the two companies — when King Soopers workers in Denver went on strike in 2022, Weiser said Kroger approached Safeway and asked that the company not poach its workers. He said the two companies also established a non-solicitation agreement for pharmacy customers, actions he said show the companies see each other as competitors.
Part of the proposed merger would be the sale of 579 stores, 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’re worried about a repeat of what we saw last time — when Safeway and Albertsons merged, they spun off stores to a company called Hagans. Hagans was not able to operate their stores effectively,” Weiser said. “They either closed down or they were sold back to the merged firm. That was a disaster. We do not want to have this disaster happen again, where consumers and workers and farmers will bear the brunt of it.”
Weiser said a promise from the companies that prices won’t go up “is not enough” and that those promises aren’t legally enforceable. He said the case against the merger will continue “until and unless the parties abandon the merger, walk away from it, say it’s not going to happen.”
The Colorado trial starts Monday and can last up to three weeks. Weiser said it’s unclear how the timing of the other two trials will work with Colorado’s trial.
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