State says Kroger-Albertsons merger may cost Coloradans $500M per year; companies dispute claim

A merger of Kroger and Albertsons would price Colorado customers as a lot as $500 million a yr due to an absence of competitors, a lawyer from the Colorado Legal professional Common’s workplace argued Monday firstly of the state’s trial looking for to dam the grocery chains from combining.

Collectively, the 2 firms account for at the least 50% of all of the grocery store gross sales in Colorado, stated Arthur Biller with the lawyer common’s workplace. He stated they’re intense rivals that compete on costs and on various fronts.

“The merger of those two corporations would imply the lack of competitors and have a devastating impact on Colorado,” Biller stated.

However an lawyer representing Kroger, which owns King Soopers and Metropolis Market shops in Colorado, solid Walmart, Costco, Amazon and different nationwide retailers because the grocery store chains’ true rivals and the explanation the 2 firms need to be part of forces. The state’s argument that the merger would violate state antitrust legal guidelines exhibits “a profound lack of knowledge of the fashionable grocery trade,” stated Matt Wolf of the Arnold & Porter regulation agency.

Wolf stated an evaluation by an skilled witness for the state that excludes Costco, Amazon, Complete Meals and different retailers as rivals for Kroger and Albertsons ignores the realities of the trade.

“Not solely does it defy widespread sense, it defies what’s taking place outdoors the 4 corners of this courtroom,” Wolf stated throughout the opening statements.

Biller stated the evaluation of the fee to customers relies on which shops are thought-about rivals for full-service grocery shops. The record of shops doesn’t embody Costco or Sam’s Golf equipment, which require memberships, and different chains that carry restricted nationwide manufacturers or consider specialty and gourmand merchandise.

The trial in Denver District Courtroom is certainly one of three looking for to dam the $24.6 billion merger of Kroger, second solely to Walmart when it comes to gross sales nationally. Costco is subsequent, adopted by Albertsons.

A trial within the case introduced by Legal professional Common Bob Ferguson of Washington state is underway. A choice is anticipated in a trial just lately concluded in federal courtroom in Oregon. In that lawsuit, the Federal Commerce Fee needs the courtroom to place the merger on maintain till the company can resolve its administrative continuing to dam the consolidation.

The attorneys common of Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming joined the FTC’s lawsuit

Albertsons has 105 shops in Colorado, most of these beneath the Safeway banner. The chains introduced plans in 2022 to merge. They’ve stated combining would permit them to higher compete in opposition to Walmart, which accounts for almost 1 / 4 of the U.S. grocery market.

As a part of the consolidation plan, Kroger and Albertsons would promote 579 shops in a $2.9 billion cope with C&S Wholesale Grocers to spur competitors. In Colorado, C&S would purchase 91 shops and a dairy plant. Kroger would retain 14 of the shops.

“C&S is a 107-year-old family-owned firm that stands prepared to supply a greater, lower-priced different for the 579 tales it’s buying,” Wolf stated.

Kroger and Albertsons stated shops gained’t shut, employees gained’t lose their jobs and grocery costs will lower if the merger is accepted. Nevertheless, the lawyer common’s workplace and unions representing the supermarkets’ staff don’t consider the claims, noting the fallout from the 2015 merger of Albertsons and Safeway.

Haggen Meals and Pharmacy, a small grocery store chain primarily based in Washington state, purchased a few of the shops and in lower than a yr filed for chapter. Haggen closed greater than 100 shops and laid off hundreds of employees.

Biller stated C&S is a wholesale distributor for grocery shops and operates solely 25 shops and one pharmacy. He contended the corporate doesn’t have the infrastructure to supply the identical type of providers as Kroger and Albertsons present.