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LOS ANGELES (CNS) - The Federal Trade Commission, in conjunction with California and seven other states, announced a lawsuit Monday challenging the proposed $24.6 billion merger of grocery giants Kroger and Albertsons.
Calfornia Attorney General Rob Bonta announced the state's involvement in the litigation during a news conference in downtown Los Angeles, later issuing a statement calling the merger "bad for workers, for agricultural producers and for California communities."
"In some markets in Southern California, Kroger-Albertsons is expected to be the only one-stop grocery option," Bonta said. "Today, we are going to bat for a more just and competitive economy, one where companies need to compete for labor and where prices and service matter. This merger will leave Californians with limited choices over where to shop -- and for workers in this industry, where to work. As many families continue to feel the burden of inflation, fighting corporate consolidation that threatens to increase prices and reduce service is more important than ever."
The FTC is leading the litigation, joined by California, Arizona, Illinois, Maryland, Nevada, New Mexico, Oregon, Wyoming, and the District of Columbia.
"This supermarket mega merger comes as American consumers have seen the cost of groceries rise steadily over the past few years. Kroger's acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today," Henry Liu, director of the FTC's Bureau of Competition, said in a statement. "Essential grocery store workers would also suffer under this deal, facing the threat of their wages dwindling, benefits diminishing, and their working conditions deteriorating."
There was no immediate response from Kroger or Albertsons.
The proposed merger was announced in 2022, a deal that would consolidate ownership of Ralphs, Albertsons, Vons and other supermarket chains. When the deal was announced, Kroger officials said the combined new company would include nearly 5,000 stores, 66 distribution centers, 52 manufacturing plants, 3,972 pharmacies and 2,015 fuel centers. More than 710,000 people work for the two companies.
Rodney McMullen, Kroger chairman and CEO, said in a statement in 2022 the deal would bring "superior value to customers, associates, communities and shareholders."
"Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores," McMullen said in a statement. "This merger advances our commitment to build a more equitable and sustainable food system by expanding our footprint into new geographies to serve more of America with fresh and affordable food and accelerates our position as a more compelling alternative to larger and non-union competitors."
In its statement announcing the deal, Kroger officials said the combined company anticipates divesting some stores. Those stores will be spun off into a new standalone company established by Albertsons named SpinCo, which is expected to include between 100 and 375 affected store locations.
The proposed merger was widely seen as an effort by the grocery giants to compete with non-union grocers such as Walmart and Costco.
The deal quickly drew opposition from the United Food and Commercial Workers union, which said the proposal would create a monopoly that would hurt workers and raise prices for consumers.