A day after judges blocked the merger, the grocery chain Albertsons on Dec. 11 backed out of its $25 billion merger with Kroger and sued its bigger rival for failing to push hard enough for federal regulatory approval of the deal.
Albertsons is the parent company of Safeway in Alaska; Kroger is the parent company of Fred Meyer in Alaska.
Albertsons’ decision to sue came the day after two judges halted the merger in separate court cases. U.S. District Court Judge Adrienne Nelson issued a preliminary injunction blocking the merger Dec. 10 after holding a three-week hearing in Portland. An hour later, Judge Marshall Ferguson in Seattle issued a permanent injunction barring the merger in Washington after concluding it would lessen competition in the state and violate consumer-protection laws.
Kroger and Albertsons in 2022 proposed what would be the largest grocery store merger in U.S. history. The companies said a merger would help them better compete with big retailers like Walmart, Costco and Amazon.
Under the merger agreement, Kroger and Albertsons — which compete in 22 states — agreed to sell 579 stores in places where their locations overlap to C&S Wholesale Grocers, a New Hampshire-based supplier to independent supermarkets that also owns the Grand Union and Piggly Wiggly store brands.
But the Federal Trade Commission sued to block the merger earlier this year, saying it would raise prices and lower workers’ wages by eliminating competition. It also said the divestiture plan was inadequate and that C&S was ill-equipped to take on so many stores.
On Dec. 11, Albertsons said that Kroger failed to exercise “best efforts” and to take “any and all actions” to secure regulatory approval of the companies’ agreed merger transaction.
Albertsons said Kroger refused to divest the assets necessary for antitrust approval, ignored regulators’ feedback and rejected stronger divestiture buyers.
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