The Haggen supermarket in Snohomish.
Photo by Stephanie Kramer
The merger between Kroger and Albertsons, two grocery store giants, is dead.
On Dec. 10, the U.S. District Court in Oregon granted the Federal Trade Commission’s (FTC’s) request for a preliminary injunction to halt the merger on antitrust concerns, as did the King County Superior Court for the State of Washington on the same day.
A day later, Albertsons backed out of the near-$25 million merger, then sued Kroger. Essentially, Albertsons lawsuit says Kroger didn’t take enough actions to prevent regulators from blocking the merger.
Over time, the two have bulked up through mergers. Kroger owns Fred Meyer and QFC; Albertsons owns Safeway, Haggen and its namesake Albertsons.
If the companies had won the antitrust court cases, a domino effect would have seen more than 400 stores nationally, including 124 stores in Washington state, sold to a third-party competitor, C&S Wholesale Grocers. On the divestiture sale list to C&S were the Snohomish Safeway, Snohomish Haggen, Monroe Safeway, the Safeway in the Silver Firs/Puget Park area and two Everett stores: the QFC at Broadway and Everett Avenue and the Safeway at 41st Street and Rucker Avenue.
Albertsons said about its lawsuit that “Kroger willfully breached the Merger Agreement in several key ways, including by repeatedly refusing to divest assets necessary for antitrust approval, ignoring regulators’ feedback, rejecting stronger divestiture buyers and failing to cooperate with Albertsons.”
Union leaders celebrated the news. They’d said the merger was a bad deal for shoppers.
“We encourage the leaders of both Kroger and Albertsons to invest resources in their stores by investing in adequate staffing so customers are better served and workers can safely and effectively operate the stores and stock the shelves,” an anti-merger coalition of unions said in a statement. These investments will result in higher sales and improved satisfaction by shoppers and employees alike.”
They said the two companies “wasted” billions toward the merger that could otherwise go toward better stores and better wages.
The FTC said it “scored a major victory for the American people” in getting the injunction, according to its Bureau of Competition Director Henry Liu in a statement.
In related news, a major shareholder in Albertsons, Cerberus Capital Management, said it does not plan to sell any of its shares, saying “While we are disappointed with the courts’ decisions, we remain confident in Albertsons’ strength as a standalone company.”
