By Mike Scarcella
(Reuters) – A private lawsuit filed in California on Thursday seeks to stop Kroger Co’s planned $25 billion purchase of rival Albertsons Companies Inc, a deal that state attorneys general, consumer groups and some U.S. lawmakers have questioned as harmful to competition in the grocery market.
The lawsuit was filed on behalf of 25 consumers in states including California, Texas and Florida who alleged the merger “will be used to increase prices for groceries, decrease the quality of food, eliminate jobs, close stores and offer less choice for consumers.”
Kroger is the biggest grocer in the U.S. by revenue, and Albertsons is the second-largest supermarket chain. Nearly 5,000 grocery stores would be under one corporate umbrella if the deal, announced in October, goes through.
The companies have defended the deal as providing a “more efficient distribution chain” and also have said they are working with the U.S. Federal Trade Commission on its regulatory review. The lawsuit appears to be the first private action challenging the deal.
A representative for Albertsons declined to comment on Friday, and a Kroger spokesperson did not immediately respond to a message seeking comment.
Stores under the Albertsons umbrella include Balducci’s, Shaw’s, Kings and Safeway. Kroger operates stores under banners including Harris Teeter, Pay Less and King Soopers.
U.S. antitrust law lets private consumers sue over proposed mergers and acquisitions, apart from any enforcement action brought by a state or federal agency policing competition laws.
Plaintiffs’ lawyer Joseph Alioto in San Francisco, who was among the attorneys who filed the complaint, said “there’s no question that Albertsons is a significant rival” of Kroger’s. “It’s competition that they are eliminating,” he said.
The lawsuit also said it seeks to force the disgorgement of a $4 billion dividend that Albertsons paid to shareholders after defeating a Washington state attorney general action challenging the payout. Plaintiffs claim the dividend “gravely weakens Albertsons’ ability to compete.”
A federal judge in Washington, D.C., separately declined to issue a preliminary injunction blocking the dividend.
The case is: Whalen et al v. Kroger Co et al, U.S. District Court, Northern District of California, No. 3:23-cv-00459.
For plaintiffs: Joseph Alioto of Alioto Law Firm; Joseph Saveri of Joseph Saveri Law Firm; and other firms
For defendants: No appearance yet
Read more:
Washington court paves way for Albertsons’ $4 bln dividend, declines to review case
Albertsons, Kroger CEOs defend $25 bln merger to U.S. Senate committee
Farm, consumer groups urge U.S. to block Kroger’s planned $25 bln buy of Albertsons
(Reporting by Mike Scarcella in Maryland; editing by Leigh Jones)
Source: KFGO
