Arizona Attorney General joins FTC lawsuit to halt Kroger-Albertsons merger

Arizona Attorney General Kris Mayes, the Federal Trade Commission and a bipartisan coalition of states announced the filing of a lawsuit Monday challenging the proposed merger of Kroger and Albertsons.

“For the better part of last year, I traveled across the state from Prescott to Kingman and Show Low to Sierra Vista to hear from Arizonans what they thought about this proposed merger,” said Mayes. “Many Arizonans I heard from voiced concerns about potential job losses from combining the two companies. Seniors on fixed incomes told me they were worried that grocery prices would only go up if the merger went through. Military families I spoke to feared their insurance would not be accepted at the pharmacy of a newly merged company. Rural Arizonans, in particular, raised serious concerns about how a merger would exacerbate existing food deserts.”

The lawsuit seeks to block the proposed merger of the grocery giants, alleging a violation the Clayton Act, which prohibits the acquisition of assets where the effect of such acquisitions may substantially lessen competition or create a monopoly. Businesses facing less competition have the ability to charge higher prices without providing improvements to the quality of goods.

U.S. Rep. Ruben Gallego, like Mayes an elected Democrat, applauded the lawsuit to block the move,
which was set to be the largest supermarket merger in U.S. history.

“We
shouldn’t allow billion-dollar corporations to rake in profits while
Arizonans suffer from rising food costs,” said Gallego. The merger “would be terrible for Arizona
shoppers, workers, and rural communities – who already deal with
existing food deserts. That’s wrong, so I pushed the FTC to stop this
merger. I’m grateful they’re stepping up to block the acquisition.”

“Contrary to the FTC’s statements, blocking Kroger’s merger with Albertsons Companies will actually harm the very people the FTC purports to serve: America’s consumers and workers,” said the the Kroger Company in a statement disagreeing with the filing. “The FTC’s decision makes it more likely that America’s consumers will see higher food prices and fewer grocery stores at a time when communities across the country are already facing high inflation and food deserts. In fact, this decision only strengthens larger, non-unionized retailers like Walmart, Costco and Amazon by allowing them to further increase their overwhelming and growing dominance of the grocery industry.”

Kroger and Albertsons are the country’s two largest national supermarket chains, and the merger presents a significant risk of reduced competition and higher food prices nationwide, according to a release from the attorney general’s office. In Arizona, Kroger and Albertsons are the fourth and seventh largest private employers, with 35,000 employees across 250 stores combined. The companies also operate under Fry’s, Smith’s, and Safeway brands in Arizona.

“The proposed merger with Albertsons Cos. will produce meaningful and measurable benefits for customers, associates and communities across the country. The combined company committed that no stores, distribution centers or manufacturing facilities will close as a result of the merger, including those divested to C&S Wholesale Grocers,” Kroger said.

“It is clear that Arizonans in rural and urban communities alike are seriously concerned about the potential for drastic changes to their daily lives if this merger goes through,” Mayes said. “Bottom line: this merger will benefit the shareholders of these companies, not regular Arizonans. I am proud to stand with the FTC and my fellow attorneys general in suing to block this anticompetitive, anti-consumer, and anti-worker merger.”

Joining Mayes and the FTC are the attorneys general of California, Washington D.C., Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming. According to Gallego, the merger is opposed by the mayors of  Sierra Vista, Bisbee, Douglas, and Benson.

A report detailing Mayes’ listening sessions held across Arizona throughout 2023 is available here. A video recap of the listening sessions is available here.