January 30, 2023

Colorado is leading a multi-state probe into the Kroger-Albertsons merger and has joined opposition to the proposed $4 billion dividend for Albertsons shareholders.

“Allowing the special dividend to be paid to investors would reduce Albertsons’ competitiveness not only while the merger review is pending, but also in the event that the merger is blocked and Albertsons is forced to proceed on its own,” said Colorado Attorney General Phil Weiser. in a statement.

The statement also said his office has “deep concerns” that the proposed merger could result in higher prices, lower wages and fewer jobs, and negatively impact farmers and other local suppliers in the state.

In an amicus letter filed in support of Washington state’s lawsuit against the Albertsons to block dividend payments, Weiser cited Colorado’s particular concerns about the merger. Kroger operates 148 stores in the state under the King Soopers and City Market banners, and Albertsons operates 105 Albertsons and Safeway stores, according to the filing.

“There are numerous markets throughout Colorado where Kroger and Albertsons compete for the same supermarket customers, including some where customers have little or no alternatives to these two companies to meet their supermarket needs,” Weiser wrote in the filing .

A Colorado union member raised similar concerns at a recent United Food and Commercial Workers press conference and spoke out against the merger.

Andres Becerril, a front-end supervisor at a King Soopers store in Denver and a member of UFCW Local 7, said in many communities a combination of Kroger-Albertsons and Walmart would dominate the market.

In Durango, Colorado, for example, which has two City Markets and an Albertsons in addition to a Walmart supercenter, the two companies would control 90% of the grocery portion, he said.

“In small communities in Colorado and Wyoming … there will be no competition,” he said. “Instead, thanks to the duopoly, these small towns would have fewer jobs and higher food prices.”

He also agreed that the merger could have a negative impact on suppliers in the region, including farmers and ranchers.

Kroger has argued that the merger could benefit suppliers by offering more stability and other benefits.

In the amicus letter, Weiser described the negative impact of the 2015 Albertsons-Safeway merger, in which Haggen acquired 146 stores to satisfy antitrust authorities, then failed to operate them successfully and filed for bankruptcy. Many of these divested stores were either reacquired by Albertsons or closed.

Albertsons should face the highest level of skepticism to ensure it is not again allowed to creatively circumvent state merger control agencies,” Weiser said in the filing.

Weiser also said he will be hosting public community forums across the state in the new year to collect feedback on the proposed merger.

As previously reported, Kroger and Albertsons have agreed to pursue a deal valued at $24.6 billion.

The two companies have proposed forming a separate company to operate businesses that would be spun off to address antitrust concerns and have promised that no businesses will be closed as a result of the transaction.

However, some observers were skeptical about the potential profitability of a spin-off, which could have extensive assets in multiple markets and continue to compete against a stronger Kroger-Albertsons combination.

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