Feb 14, 2024 - Business

Colorado sues to block Kroger-Albertsons merger

Illustration of an Albertsons' grocery bag inside of a Kroger's bag.

Illustration: Shoshana Gordon/Axios

Colorado Attorney General Phil Weiser filed a lawsuit Wednesday to block Kroger's $24.6 billion merger with Albertsons, his office announced.

Why it matters: The state's challenge raises the stakes for Kroger, which has been trying to avoid litigation.

Catch up fast: Weiser has been leading a multi-state investigation since December 2022 and is the second state to sue following Washington.

Zoom in: The announcement said the deal not only reduces head-to-head competition, but its divestiture proposal is inadequate, because it would not "alleviate the anticompetitive effects of the merger."

  • During a press conference addressing the lawsuit, Weiser noted it was filed in a Denver District Court under Colorado's antitrust statute.
  • He argued that the deal would give Kroger considerable power with a 50% market share.

Meanwhile, Colorado is also challenging no-poach and non-solicitation agreements between Kroger and Albertsons and is seeking civil penalties and injunctive relief as a result, Weiser says.

  • The no-poach agreement restricted the two companies from hiring each other's employees, he alleges.
  • The non-solicitation agreement prevented the two grocers from going after each other's pharmacy customers, Weiser also alleges.
  • Both are in violation of antitrust laws and underscore the state's argument for opposing the merger, he says.

What they're saying: "I believe it will also help convince the Federal Trade Commission, which is reviewing this merger," Weiser said during the press conference announcing the suit where he noted that Colorado's complaint will provide a basis for the regulatory agency to contest the merger.

  • Kroger and Albertsons said in a statement that they are disappointed by the Colorado lawsuit while they are still in active dialogue with the FTC and other state attorneys general, adding they will "vigorously" defend their merger in court.

The FTC declined to comment.

Editor's note: This story has been updated with comments and details of the suit.

If you need smart, quick intel on dealmaking in the retail industry for your job, get Axios Pro.

Go deeper