Kroger-Albertsons Merger Trial Concludes in Colorado; Decision Expected Soon | PYMNTS.com

Following a rigorous four-week trial, the highly anticipated $24.6 billion merger proposal between Kroger and Albertsons—the two largest grocery chains in Colorado—now rests in the hands of Denver District Court Judge Andrew Luxen. The upcoming ruling is expected to set a critical precedent for antitrust law and could have sweeping effects beyond Colorado.

In February, Colorado Attorney General Phil Weiser filed a lawsuit to prevent the merger, alleging it would infringe on state antitrust laws and pose “substantial harm” to both consumers and grocery workers across the state. According to Colorado News, Weiser’s office has voiced concerns that the deal could consolidate grocery options to an unhealthy extent, particularly affecting rural and mountain communities that already have limited access to food retail.

The core of the legal clash centers on Kroger’s acquisition of Albertsons, a move the grocery giant has justified as a necessary strategy to compete against large national retailers like Walmart, Costco, and Amazon, which have steadily increased their footprint in the grocery sector. Matt Wolf, an attorney representing Kroger, argued that the merger would result in benefits for Colorado shoppers, including “lower prices, higher pay for union and non-union associates alike, and cleaner, better-stocked stores for hundreds of thousands of Coloradans.”

“While Walmart and Costco and Amazon might be pleased with the state’s efforts today, grocery shoppers in Colorado will pay more and get less if the state has its way,” Wolf said during the closing arguments.

Kroger, headquartered in Ohio, and Albertsons, based in Idaho, collectively operate nearly 5,000 grocery locations across the U.S. and view this merger as a crucial countermeasure to the massive scale of retail giants outside the traditional grocery sphere. However, labor unions, consumer advocates, and Weiser’s team caution that further consolidation could lead to diminished competition, thereby raising prices, reducing wages, and eroding worker bargaining power.

Per Colorado News, one of the contentious points in court was the proposed divestiture plan by Kroger and Albertsons. To alleviate antitrust concerns, the companies have offered to sell 579 stores, including 91 Safeway stores in Colorado, to C&S Wholesale Grocers, a New Hampshire-based company with limited retail experience. C&S, primarily a wholesaler with just 23 grocery stores nationally, would be tasked with maintaining competition in markets where Kroger and Albertsons currently operate.

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Critics argue that C&S lacks the capacity to stand up to the dominant Kroger-Albertsons combination, drawing comparisons to the ill-fated 2015 divestiture following Albertsons’ merger with Safeway. In that instance, the Haggen grocery chain acquired 168 stores but quickly went bankrupt, leading to the eventual reacquisition of many of these locations by Albertsons.

State attorney Arthur Biller voiced strong opposition to the divestiture plan, claiming C&S would be a “weaker competitor” unable to fulfill the critical role of maintaining competition. Biller cited testimony suggesting that up to 85 of the 91 divested stores in Colorado could be at risk of closing if the merger proceeds, a scenario that would further reduce grocery options in the state.

“It is in Kroger’s interest to have the weakest possible divestiture plan,” Biller argued, adding that the merger is less about competition with Amazon or Costco than it is about “eliminating Albertsons from the market and replacing it with a far inferior competitor.”

The lawsuit and trial followed a yearlong investigation by Weiser’s office, which included over a dozen listening sessions across Colorado. Concerns were particularly high in mountain towns and rural areas, where residents fear the loss of one of their few grocery options could result in higher prices and travel distances for essentials. The outcome of this trial could also have ripple effects nationally, influencing how similar mergers are handled in an era marked by rising concerns over corporate consolidation.

Source: Colorado News