SEATTLE — Opponents of the proposed merger between Kroger and Albertsons got some high-profile backup Friday when around two dozen U.S. lawmakers asked a federal court in Oregon to temporarily block the deal.
U.S. Rep. Pramila Jayapal, D-Seattle, Sen. Maria Cantwell, D-Wash., and Sen. Ron Wyden, D-Ore., filed a legal brief in support of the Federal Trade Commission, which had earlier asked a federal judge to pause the $25 billion merger until the FTC can assess its effects.
Federal and state approval is needed for the deal between Kroger, which owns Fred Meyer and QFC, and Albertsons, owner of Safeway and Haggen.
The brief, filed by Jayapal and Wyden on behalf of more than 25 lawmakers, echoes the FTC’s concerns that the tie-up could reduce competition in the grocery business, leading to higher prices for shoppers and less bargaining power for tens of thousands of union workers.
Local Angle
Eleven Clark County grocery stores will be sold as part of the planned merger between grocery giants Kroger and Albertsons, the companies disclosed last month. The divestiture list includes nine Safeway stores, a QFC and an Albertsons. The stores are expected to be sold to C&S Wholesale Grocers, parent company of Grand Union grocery stores and the Piggly Wiggly franchise. C&S said no stores will close as a result of the merger and that all frontline associates will remain employed. All existing collective bargaining agreements will continue. The sale to C&S will not go through until Kroger and Albertsons close on their merger, which hasn’t been officially approved. Until then, the Safeway, QFC and Albertsons stores will continue to operate as they are, according to a Kroger spokeswoman. The Camas and Washougal Safeway stores and the location on east Mill Plain Boulevard are not part of the divestiture.
“We really wanted to highlight for the court that as members of Congress, we are hearing about this from our constituents, and we are really deeply concerned about what’s going to happen to real people when this merger goes through,” said Jayapal, who sits on the House antitrust subcommittee.
Similar concerns were raised in separate lawsuits by Washington state and Colorado.
Friday’s filing also shared the FTC’s skepticism about claims by Kroger and Albertsons that competition can be preserved by selling hundreds of stores, including 124 in Washington, to New Hampshire-based C&S Wholesale Grocers.
C&S is primarily a grocery wholesaler, with a relatively small retail operation, and lacks experience running pharmacies, internal data analytics and customer loyalty programs, as well as other retail functions, according to the brief.
Some critics have raised concerns that C&S might be unable to effectively compete against a combined Kroger-Albertsons, or other grocery players, and might even choose to close some stores.
In an emailed statement, a Kroger spokesperson repeated earlier assurances that “zero stores will close as a result of the merger, all frontline associates will remain employed, all existing collective bargaining agreements will continue, and associates will continue to receive industry-leading benefits alongside bargained-for wages.”
Kroger said “C&S’s strong operational focus and financial resources will position the divested stores to successfully operate and serve their communities for years to come.”
The merger is of particular interest to shoppers and workers in Washington state, which has a heavy concentration of Kroger and Albertsons stores.
The 124 stores in Washington that would go to C&S, including nearly 70 in the Seattle area, represent around 40% of the two companies’ total in the state.
In July, the companies released a list with the locations of each store that would be sold. According to the list, C&S would acquire all but one of the state’s QFC stores — in Seattle’s University Village shopping center — along with a large number of Safeway stores but no Fred Meyer stores.
On Jan. 15, Washington Attorney General Bob Ferguson filed the first government lawsuit seeking to block the merger on grounds that it violated state antitrust laws and would result in higher grocery prices.
On April 26, a King County Superior Court rejected efforts by Kroger and Albertsons to dismiss the suit, which is scheduled to go to trial Sept. 16.
But as Friday’s filing suggests, the federal case against the merger, which the FTC filed Feb. 26, represents the more significant legal battle.
On Aug. 26, the FTC will ask the federal court in Oregon to temporarily halt the merger, through a preliminary injunction, until the FTC can complete a full review of the merger.
Some experts think that if the court grants the injunction, Kroger and Albertsons will abandon the deal rather than wait for the FTC’s review, which starts this month and could last many months.
Friday’s brief, which was drafted by one of the top antitrust firms in the U.S., likely won’t change the outcome of the case, but it does send an important signal, said John Kirkwood, an antitrust expert and former FTC official who teaches law at Seattle University.
“It’s telling the judge that this merger is so important to consumers and workers in the states of Oregon and Washington that the legislators have decided they’re not only going to issue a news release or hold a news conference, but they’re actually going to file an amicus brief,” Kirkwood said. “It won’t change the legal analysis, but it underlines that this is a significant merger.”
