Consumer Group Looks to Stop Kroger-Albertsons Merger With Lawsuit

A group of 25 consumers from 11 U.S. states has filed a private lawsuit in federal court to block Kroger’s planned $24.6 billion acquisition of Albertsons. The group claims the merger would contravene antitrust law by reducing competition, raising prices, and limiting consumer choice. The merger would combine the two largest supermarket companies in the U.S. and create a company with around 4,996 stores and 710,000 workers in 48 states and the District of Columbia.

The consumer group argues that the new company’s power would lead to job losses, store closures, less choice, and increased prices. The suit demands a permanent block of Kroger’s acquisition of Albertsons and the prohibition of Albertsons from paying out a $4 billion dividend, which the suit calls an attempt to financially weaken the company.

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The lawsuit claims the elimination of Albertsons would decrease consumer choice without adding to industry capacity, jobs, or output, and would lead to higher prices and other anticompetitive effects. Kroger and Albertsons have responded to the lawsuit by arguing that the deal would create economies of scale and personalized promotions, provide better access to integrated brick-and-mortar and digital channels, and lower prices.

Kroger currently holds 23.6% of the market share, with Albertsons holding 12.4%. Together, they would command roughly 36%.

The suit asks the court to stop the merger and block Kroger from acquiring Albertsons under Section 7 of the Clayton Antitrust Act. The consumer group argues that proposed store divestitures would not adequately resolve antitrust concerns raised by the deal — Albertsons and Kroger said they plan to divest between 100 and 375 stores to address regulatory concerns.

The suit also argues that the payment of the $4 billion dividend to Cerberus Capital Management, Albertsons’ largest shareholder, would weaken Albertsons’ competitive position relative to Kroger and raise prices for consumers.

The deal is expected to close in early 2024, pending regulatory approval and other closing conditions. However, industry observers say antitrust regulators could force the companies to sell more stores than planned, which could delay the closure of the transaction.

The consumer group is represented by multiple counsel, led by the Alioto Law Firm in San Francisco. The 25 consumers are from Colorado, Florida, Louisiana, Massachusetts, Michigan, Nevada, Ohio, Pennsylvania, Texas, Washington, and California.