Washington State Poised to Sue Over Kroger-Albertsons Deal (1)

The Washington state attorney general is expected to file a lawsuit seeking to block Kroger Co.’s proposed takeover of Albertsons Cos. as soon as Thursday afternoon, according to a person familiar with the plan.

The lawsuit is expected to be filed in state court, said the person, who asked not to be named discussing an ongoing investigation.

The US Federal Trade Commission and a group of other states that are also probing the deal aren’t involved in the Washington state lawsuit, the person said. Any lawsuit by the FTC would likely be filed in federal court.

A combined Kroger-Albertsons would have nearly 5,000 stores across the country merging the banners of Kroger, Ralphs, and Harris Teeter with Albertsons, Safeway, Acme and Jewel-Osco, among others. The two biggest grocers in the US compete head-to-head in dozens of markets, with Washington state expected to be the second most impacted by the deal after California. In a bid to reduce the antitrust concerns, the companies agreed to divest 413 stores to Piggly Wiggly chain owner C&S Wholesale Grocers Inc.

The combined company “will expand competition, lower prices, protect union jobs, and enhance customers’ shopping experience,” an Albertsons spokesperson said in a statement. “The only parties that would benefit if this deal is blocked would be Amazon, Walmart and other large, non-union retailers who continue to increase their dominance in the grocery space.”

A Kroger spokesperson said the acquisition would increase wages for workers and that a lawsuit over the deal would be “premature” since the company continues to talk with the FTC and other states.

A spokeswoman for Washington Attorney General Bob Ferguson said the agency had no announcements Thursday.

Ferguson, a Democrat running for governor this fall, previously sued in an unsuccessful effort to stop Albertsons from paying $4 billion to shareholders as a special dividend after it announced the Kroger deal. Albertsons said the dividend payment was independent of the merger, and a state court declined to block the payout.

State attorneys general have independent authority to enforce state and federal antitrust law, but in most cases join together with federal enforcers on lawsuits. Those partnerships have sometimes fallen by the wayside on particular mergers, for example, a group of states unsuccessfully sought to block T-Mobile US Inc.’s purchase of Sprint even though the Justice Department okayed the deal with conditions. But states rarely opt to take on major mergers on their own.

The Teamsters union, which represents many warehouse employees and truck drivers, as well as the United Food and Commercial Workers International, which mainly represents in-store workers, are also opposed to the deal.

The antitrust review by the FTC and other states remains ongoing, the person said. Both California Attorney General Rob Bonta and Arizona Attorney General Kris Mayes, both Democrats, have expressed serious reservations about the deal. A timing agreement on when antitrust enforcers will reach their decision was extended from Jan. 17 until mid-February.

(Updates with details on opposition to the deal in penultimate paragraph. An earlier version corrected the party affiliation of Mayes in last paragraph.)

To contact the reporters on this story:
Leah Nylen in Washington at lnylen2@bloomberg.net;
Anna Edgerton in Washington at aedgerton@bloomberg.net

To contact the editors responsible for this story:
Sara Forden at sforden@bloomberg.net

Elizabeth Wasserman

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