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Colorado AG: Kroger, Albertsons accords show need to block merger

 Colorado Attorney General Phil Weiser speaks to reporters at the U.S. Supreme Court Building on December 05, 2022

Colorado Attorney General Phil Weiser. Photo: Anna Moneymaker/Getty Images

Based on Kroger and Albertsons' no-poach and non-solicitation agreements, Colorado Attorney General Phil Weiser tells Axios, it's clear the two companies considered the other a primary competitor.

Why it matters: Weiser is suing to block the two companies' merger and sees this observation as helping strengthen his argument.

State of play: Kroger didn't attempt to reach no-poach or non-solicitation agreements with Walmart, Costco or any other food retailer the grocery chain has said should be included in a list of  competitors, Weiser says.

  • When workers went on strike in 2022 at King Soopers, a Colorado grocery banner operated by Kroger, the only retailer it was worried about losing employees and customers to was Albertsons, he alleges.
  • The no-poach agreement restricted the two companies from hiring each other's employees, while the non-solicitation agreement prevented the two grocers from going after each other's pharmacy customers, Weiser also alleges.

Of note: Whether the agreements have or had carryover beyond the strike, Weiser says he doesn't know.

  • "We have an email that this is what they agreed to," he says.

The other side: "It is disheartening for Coloradans that (Attorney) General Weiser would mischaracterize the facts because there was not then, and there is not now, non-solicitation or so-called no-poach agreements between Kroger and Albertsons," a Kroger spokesperson says.

  • "Employees at both companies regularly join our teams from — and exit our companies for opportunities to work at — Albertsons, Kroger, Walmart, Amazon, Costco and other retailers as well as restaurants, food service companies, convenience stores, warehouses and more," the spokesperson says.

What's next: Weiser says his office is working closely with the FTC and other state attorneys general to test legal theories and establish evidence.

  • He cautions, however, that Colorado's lawsuit is "on us and us alone."

What they're saying: Weiser defends his decision to bring the lawsuit before the FTC has decided whether to challenge the deal.

  • "We are a sovereign state," he says, noting the law doesn't dictate that Colorado take guidance from the FTC.
  • Competition is a better way to hold companies accountable, as opposed to holding them legally responsible after a merger's completion to promises made, Weiser says.
  • He cites the failure of past agreements and divestitures, namely the merger of Albertsons and Safeway.

Meanwhile, an Albertsons spokesperson tells Axios, "Blocking this merger would only serve to strengthen larger, non-unionized retailers like Walmart, Costco and Amazon, by allowing them to maintain and increase their overwhelming and growing dominance of the grocery industry."

The intrigue: If the FTC elects not to challenge the deal, it would put Colorado's lawsuit in uncharted waters, Weiser says.

What we're watching: Other states such as California are weighing lawsuits of their own.

Catch up fast: Colorado, which filed its lawsuit on Wednesday in a Denver District Court, is seeking to block the merger as well as civil penalties and injunctive relief over the agreements, all for violating antitrust law.

  • "I believe it will also help convince the Federal Trade Commission, which is reviewing this merger," Weiser said separately during the press conference announcing the suit.

The FTC declined to comment.

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