By Jen Schumann | Contributor, Rocky Mountain Voice
The $24.6 billion merger between Kroger and Albertsons is currently in legal limbo in Colorado. Following a lawsuit initiated by Attorney General Phil Weiser in February 2024, the state’s grocery market’s future hangs on Judge Luxen’s upcoming decision.
Prior to trial, Weiser asserted, “In all events, the Kroger/Albertsons merger is bad for consumers, workers, farmers and communities.”
Kroger defended it as a way to lower prices, protect jobs and preserve competition.
Attorney General Phil Weiser says the merger would “eliminate” competition between the two grocery giants.” It would consolidate an already concentrated market. His lawsuit claims this would result in higher prices and reduced consumer choice.
Kroger, however, counters this with data. It shows a 14% drop in their market share over the past decade. Meanwhile, Walmart, Amazon and Costco now control 48% of the Colorado grocery market. In this changing world, the merger is vital to compete with the retail giants.
The merger helps Kroger and Albertsons compete with global giants. It will lower grocery prices for Colorado consumers.
Weiser cites the 2015 Albertsons/Safeway merger as a cautionary tale. Promised fixes, like selling stores, failed. This led to closures and job losses. He warns the same could happen again.
Kroger has preemptively tackled this concern with a robust divestiture plan. Kroger sold 91 stores to C&S Wholesale Grocers, a proven operator. This prevents store closures and layoffs of frontline workers. Also, C&S will honor collective bargaining agreements for the acquired stores.
C&S will honor the unions’ contracts for the divested stores’ employees. This will preserve their jobs after the merger.
Weiser argues that the merger could raise grocery prices. The hardest hit would be Colorado families.
Kroger’s response is clear. Their $1 billion commitment to lower prices, including $40 million for Colorado, shows their focus on affordability. Kroger’s past mergers with Harris Teeter and Roundy’s proved it can cut prices.
Albertsons shoppers currently pay 10–12% more for groceries. This merger will reduce that disparity, benefiting shoppers.
Without the merger, Albertsons admits it may need to raise costs or cut operations to survive. This reality, Kroger argues, would do more harm than good for Colorado communities.
Weiser opposes the plan because it may harm workers and unions. Kroger, however, supports union jobs. It promises no job losses and a $1 billion investment in wages and benefits over five years.
This merger is key to protecting union jobs in Colorado’s grocery industry. It will ensure stable employment.
Albertsons CEO Vivek Sankaran testified that, without the merger, layoffs, store closures or market exits might occur. The merger is a way to protect stable jobs. It aims to counter the dominance of non-unionized rivals like Walmart and Amazon.
Weiser also alleges antitrust violations, including an illegal no-poach agreement during the 2022 King Soopers strike. Weiser is seeking $1 million in civil penalties from each company for this agreement. Kroger denies these claims, stating evidence does not support allegations of wrongdoing. They also argue that the state’s lawsuit duplicates ongoing federal efforts.
AG Weiser’s fight to stop this merger has diverted Colorado taxpayers’ resources for almost a year. The state could have focused its resources on fighting the crime plaguing Coloradans. Yet he argued, “Nearly two years since the companies announced the merger, we finally have the chance to prove in court why this deal would be bad for Colorado and the country.”
The trial in Denver District Court, overseen by Judge Luxen, has finished its closing arguments. A ruling is pending the judge’s deliberations
For Colorado communities, the outcome of this case will have lasting implications. This case shows that stakeholders must weigh lower costs and stable jobs against the danger of business failure from a tough economy.
They must also be ready to face attorneys general who punish those who dare to adapt their business strategies to survive. The face-off may result in steep civil penalties from the state when profit margins in the grocery industry rarely exceed 3%.