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Colorado Attorney General Phil Weiser announced Wednesday his office was suing to stop the proposed $25 billion Kroger takeover of rival Albertsons and accused the two chains of having "blatantly violated antitrust law."
Weiser said the merger would eliminate head-to-head competition between Kroger and Albertsons, which he claimed would harm consumers, workers, and suppliers. He noted Kroger operates 148 stores (under the King Soopers and City Market banners) in the state and Albertsons runs 105 stores (under its namesake and Safeway banners).
He noted the deal would create "significant market power to raise prices" in urban areas, like Denver. He added the deal would also deeply affect smaller markets, like Gunnison, which only has two supermarkets operated by the merging rivals.
The lawsuit is the second antitrust case filed by a state to block the deal. Washington state filed its own case on Jan. 15. There is also a pending consumer lawsuit also seeking to halt the deal in federal court in California. The legal actions come as federal regulators at the Federal Trade Commission are deciding whether to challenge the merger.
The case is also the second one filed in a state court though attorneys general have the ability file antitrust actions in federal court. Antitrust experts note that while U.S. regulators may sue to halt the merger in federal court, the state cases are separate legal threats that also have the potential to kill the deal.
"Congress intentionally designed U.S. antitrust laws to provide standing to different types of parties. This means federal, state, and consumers all have equal authority to challenge a merger," Christine Bartholomew, a law professor at the University at Buffalo, told The Enquirer. "I suspect there may be others in the near future."
Kroger said in a statement it is working with multiple attorneys general and the FTC to address their antitrust concerns.
“We are disappointed in Attorney General Weiser’s premature decision to file a lawsuit while the merger is still under regulatory review," the company said, adding it would "vigorously defend" the deal in court.
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The antitrust lawsuit, filed in the state's Denver District Court, came after Weiser's office investigated the deal's potential impact for a year and held several public forums with consumers.
“Coloradans are concerned about undue consolidation and its harmful impacts on consumers, workers, and suppliers,” Weiser said in a statement. “After 19 town halls across the state, I am convinced that Coloradans think this merger between the two supermarket chains would lead to stores closing, higher prices, fewer jobs, worse customer service, and less resilient supply chains.”