KROGER IN COURT: Grocery Execs Testify in Washington as Colorado Trial Begins
Day 10 of The Kroger Co.’s court battle against the state of Washington brought testimony from five third-party witnesses on grocery competition. The ongoing trial sees Washington Attorney General Bob Ferguson and the state’s outside counsel at Munger Tolles & Olson LLP reviewing antitrust concerns in the proposed $24.6 billion merger between Kroger and Albertsons Cos.
For its part, Washington state is seeking to avoid the situation it found itself in a decade ago, when Albertsons acquired the Safeway chain, which resulted in Haggen’s bankruptcy.
Taking the stand to discuss grocery competition were Sarah George, SVP of merchandising at Costco Wholesale; David Spear, VP of merchandising at PCC Community Markets; Cliff Rigsbee, CEO at Rosauer's; Nathan Tucker, EVP, retail operations at WinCo; and Marc Lieberman, VP, store layout and design at Walmart US.
Kroger remains steadfast in its view that the grocery landscape is rapidly expanding to include a diverse assortment of retailers, including club stores, big retailers like Walmart and Target, hard discounters like ALDI and Lidl, and growing competitors like Amazon. Kroger also believes that merger opponents ignore the fiercely competitive and rapidly evolving marketplace that Kroger and Albertsons operate in.
Meanwhile, the third merger review case in Colorado began Sept. 30. In February, following a year-long investigation the Colorado Attorney General Phil Weiser filed a lawsuit in Denver District Court to block the merger. According to the lawsuit, the deal would eliminate head-to-head competition between Kroger and Albertsons and consolidate an already concentrated market.
According to Kroger, its divestiture plan directly addresses competitive harm in Colorado, with C&S Wholesale poised to operate 91 of the 105 Colorado Albertsons stores. Only 14 of the stores included in the merger deal will be operated by Kroger, and there is no competitive harm in any of those 14 communities. Kroger says its plan is to reduce prices in Albertsons store locations by $1 billion, including $40 million in Colorado alone.
Further, Kroger asserts that it chose C&S as its divestiture partner because the retailer is the “anti-Haggen.” Kroger says C&S is well capitalized, has three years to rebanner its stores, has a nationwide distribution network that serves three times the number of stores as Albertsons operates today, and it will be supported by Kroger in private label brands, IT infrastructure, customer data and distribution management for several years following the merger.
A decision is expected this week from the U.S. District Judge for Oregon Adrienne Nelson in the FTC’s case against the merger.
Cincinnati-based Kroger serves more than 11 million customers daily through a digital shopping experience and retail food stores under a variety of banner names. The grocer is No. 4 on The PG 100, Progressive Grocer’s 2024 list of the top food and consumables retailers in North America.
As of June 15, Albertsons Cos. operated 2,269 retail food and drug stores with 1,725 pharmacies, 403 associated fuel centers, 22 dedicated distribution centers and 19 manufacturing facilities. The Boise, Idaho-based company operates stores under more than 20 banners. Albertsons is No. 9 on The PG 100.
Keene, N.H.-based C&S is No. 18 on PG’s list.
