Washington state went to court on Monday to try to stop it. Proposed merger Speaking on the dispute between Albertsons and Kroger, he said shoppers would end up paying hundreds of millions more for groceries each year if the supermarket chains no longer compete closely.
Albertsons and Kroger say the merger will help them Low prices and compete better with bigger rivals Like WalmartCostco and Amazon.
“This is real competition,” Kroger attorney Mark Perry said in his opening arguments in King County Superior Court in Seattle. “The evidence will establish that Kroger and Albertsons face an existential threat from these giants and this merger is a response to that threat.”
But Washington lawyer Glenn Pomerantz said there is no Walmart in Seattle or many other markets where Albertsons and Kroger currently operate. Albertsons and Kroger have more than 300 stores in the state and control more than half of grocery sales there.
“There's no existential threat here. There's just healthy competition,” Pomerantz said. “Kroger and Albertsons don't need to merge to be successful. They're already successful.”
The case is one of three challenging the $24.6 billion deal, which was announced nearly two years ago. The Federal Trade Commission is currently investigating the deal. Fighting the merger In federal court in Oregon, where closing arguments were expected on Tuesday. Colorado has also filed suit to prevent the merger.
Washington wants to block the merger nationwide. Pomerantz said Monday that the merger proposal is an “all-or-nothing deal,” and that if Kroger and Albertsons want to keep the merger going, their agreement must conform to Washington’s consumer protection laws.
But Kroger and Albertsons said one state may not have the power to stop a nationwide merger.
“Washington state laws stop at the borders of Washington,” Perry said.
under a plan Easing Regulatory ConcernsIf the merger goes through, Kroger and Albertsons would sell 579 overlapping stores, 124 of which would be in Washington. That's the highest number among the 19 states on the list. Washington says the proposed buyer, C&S Wholesale Grocers, has little experience running stores or pharmacies and would likely close stores.
Pomerantz said Washington has learned some hard lessons from past grocery mergers. A decade ago, Albertsons bought the Safeway chain. To satisfy regulators concerned about that deal's potential impact on supermarket competition and consumers, Albertsons sold 146 stores to Haggen, a smaller grocery chain based in Bellingham, Washington.
But Haggen struggled to expand. Within six months, it closed 127 stores — including 14 in Washington — and laid off thousands of employees. Haggen sold its remaining stores to Albertsons in 2016. Now, if the merger with Kroger goes through, 10 Haggen stores in Washington are on the list to be sold.
Perry said this merger would be different, and C&S would gain a portfolio of stores, brands and executive talent that would make it a stronger competitor.
“Hagen was basically left to swim on his own,” Perry said.
But some Washingtonians are skeptical.
“It’s horrible,” said Tina McKim, a founding member of the Birchwood Food Desert Fighters, a group that came into being in 2016 after Albertsons acquired the Haggen store and then closed a store about a mile away in Bellingham’s Birchwood neighborhood.
When it sold its former Birchwood store two years later, Albertsons included a restriction: For the next 20 years, no grocery store could open in the Birchwood shopping plaza. Albertsons says such restrictions — sometimes used when a store is close to a store that's closing — can help grocery companies stay competitive.
But it was a huge shock to the community, McKim said. For 35 years, the Birchwood store had served the elderly, students, people with disabilities and low-income residents who suddenly didn't have easy access to fresh food.
“We were all really shocked by that. How can food access be so limited in an area?” McKim said. “It made it really difficult for anyone without a car to go to another grocery store.”
McKim's group tries to fill the gap by collecting food donations and bringing in produce from local farms, but “it's nowhere near reaching the level of what people need,” he said.
This summer, after an investigation by Washington's attorney general, Albertsons lifted its ban on the shopping plaza. McKim said the Big Lots that moved into the former grocery store is closing soon, and he hopes the space will attract another supermarket. But even if that happens, the community may never get back the unionized jobs that were lost after Albertsons closed, he said.
McKim said there is a Walmart in his area, but it is further away from Birchwood than the Albertsons-operated Haggen store, which is on the list of stores that would be sold to C&S. He also doesn't agree that Kroger and Albertsons need to merge to compete with Walmart.
“This city is growing so fast that the need for food everywhere is very important,” McKim said. “When you see other stores succeed, it's because they cater to the needs of the neighborhood.”