Last week, the proposed merger between supermarket giants Kroger and Albertsons stalled after judges overseeing two separate cases both halted the deal.
“A tie-up between the two largest U.S. grocery-store operators was bound to draw scrutiny from government antitrust watchdogs and consumers angry about rapidly climbing food prices. Albertsons officials now allege that Kroger’s approach to the federal antitrust review further stacked the odds against the deal,” wrote the Wall Street Journal.
Albertsons is also suing Kroger for breach of contract and accusing it of failing to exercise its “best efforts” to get regulatory approval, reported the Washington Post. Albertsons is seeking “billions of dollars in damages” from Kroger for its “self-serving conduct” that has harmed consumers, associates and shareholders, the Boise, Idaho-based chain said in a news release.
“Albertsons alleged that Kroger turned away potential divestiture buyers with long track records in running large-scale retail grocery businesses and instead selected C&S Wholesale Grocers, a bidder whose primary experience is as a wholesaler,” per Supermarket News. “About 60 potential bidders signed non-disclosure agreements to begin talks with Kroger in the first half of 2023. The lawsuit redacted the name of one large-scale grocery competitor interested in the deal.”
“Putting a serious divestiture offer on the table right from the start would have made FTC staff reluctant to recommend blocking the merger and would have provided a solid platform for negotiating a solution,” the lawsuit stated. “Kroger chose not to do this.”
Kroger refuted the allegations. “This is clearly an attempt to deflect responsibility following Kroger’s written notification of Albertsons’ multiple breaches of the agreement,” the company said. “Kroger looks forward to responding to these baseless claims in court. We went to extraordinary lengths to uphold the merger agreement throughout the entirety of the regulatory process and the facts will make that abundantly clear.”
The merger was first announced in October 2022 and would have been the largest grocery store merger in U.S. history at about 4,000 stores. Kroger had promised to invest $1 billion in lowering grocery prices, an additional $1 billion in higher grocery worker wages and $1.3 billion to improve Albertsons stores.