Albertsons Takes Legal Action Against Kroger Following Blockade of $24.6 Billion Merger by Oregon and Washington Courts

Albertsons has officially canceled its $24.6 billion merger agreement with Kroger following a judicial block from both federal and state judges. The grocery powerhouse, which operates 76 Albertsons and Safeway stores across Arizona, has subsequently filed a lawsuit against Kroger in the Delaware Court of Chancery.

The legal battle stems from an accusation that Kroger failed to take adequate measures to secure regulatory approval for the proposed merger, which had been announced in 2022. This lawsuit comes on the heels of a federal lawsuit initiated by the Federal Trade Commission (FTC), joined by seven states, including Arizona. Earlier this week, a federal judge in Oregon and a state judge in Washington blocked the merger, citing concerns over reduced competition that could lead to higher prices and poorer quality goods for consumers, as well as diminished wages for grocery workers.

Albertsons’ complaint, though not yet public, claims that Kroger “willfully breached” the merger agreement by neglecting regulatory feedback and failing to divest necessary assets. These divested assets were intended to mitigate antitrust concerns. Prior to the termination, Kroger and Albertsons had planned to sell 579 stores nationwide to C&S Wholesale Foods, including 101 in Arizona, as part of their strategy to appease regulators.

Tom Moriarty, General Counsel and Chief Policy Officer for Albertsons, stated that the merger was intended to benefit consumers. However, he accused Kroger of acting solely in its financial interests, which he claims has caused harm to shareholders, employees, and consumers alike.

In response, Albertsons is pursuing a $600 million termination fee along with additional claims totaling billions for losses incurred due to Kroger’s actions. Kroger, on the other hand, has vehemently denied the allegations, labeling them as “baseless.” The company argues that it consistently upheld the terms of the merger agreement while asserting that Albertsons was the one violating contract terms.

Officials in Oregon rejoiced at the merger’s collapse. Attorney General Ellen Rosenblum and U.S. Senator Ron Wyden viewed this outcome as beneficial for grocery shoppers, emphasizing that the merger would have led to higher prices and tougher conditions for workers in the retail grocery sector. Wyden remarked, “This is great news for grocery shoppers in Oregon who would have faced higher prices at Kroger and Albertsons if this ill-conceived consolidation had gone through.”