Judge will rule in Colorado trial

Lawyers for the state and supermarket chains Kroger and Albertsons on Thursday wrapped up a trial over the companies’ proposed $24.6 billion merger, mutually disparaging each other’s experts and accusing each other of pushing an agenda that will harm consumers. Colorado shoppers and workers.

Final arguments are limited a trial that began on October 1 and it is the third that seeks to block the merger of the food giants on the grounds that it would raise prices, reduce competition and harm the stores’ customers, workers and local suppliers. The Federal Trade Commission and the attorneys general of Colorado and Washington states filed lawsuits saying the merger would violate federal and state antitrust laws.

Denver District Judge Andrew J. Luxen will issue a ruling in the case, although there was no deadline for that decision on Thursday.

Phil Weiser, Colorado Attorney General filed suit in February to block the merger after holding 19 town halls across the state to hear public input. He has said that people were overwhelmingly opposed to consolidation.

But Matt Wolf, the attorney representing Kroger, accused the state of trying to stop his client from lowering prices to Colorado shoppers and raising workers’ wages. Kroger has committed to spending $1 billion a year to increase wages and benefits and $1 billion a year to lower prices for customers.

“Antitrust laws were written to encourage, not obstruct, pro-consumer settlements like the one before the court,” Wolf said. “While Walmart, Costco and Amazon might be pleased with the state’s efforts today, grocery shoppers will pay more and get less if the state has its way.”

Kroger CEO Rodney McMullen and Vivek Sankaran, CEO of Albertsons testified earlier this month that combining their companies is the best way to compete against Walmart, the country’s leading supermarket by sales, and other growing chains. Otherwise, Sankaran said Albertsons may have to lay off employees and exit some markets to remain financially viable.

But lawyers for the state argued that the merger, which would be the largest supermarket consolidation in U.S. history, warned of store closings, job losses and higher prices if the merger goes through. Kroger, which operates King Soopers and City Market stores in Colorado, and Albertsons Cos., which owns Safeway, compete head-to-head and together account for at least 50% of all grocery sales in Colorado, according to the attorney general’s office. . .

A plan to sell 579 of the companies’ stores to try to allay fears about loss of competition in the market will not work because the buyer, C&S Wholesale Grocers, does not have the resources or experience to compete with Kroger after the merger. . said State Attorney Arthur Biller. C&S is a grocery distributor with few retail stores and has sold many of the stores it acquired in the past, believing the sales are good for its distribution business, he added.

“This makes C&S not only a smaller competitor than Albertsons, but also a worse competitor,” Biller said.

In Colorado, the proposed divestiture would spin off 91 of the stores owned by Albertsons, a dairy plant and a distribution center for C&S. Two Albertsons stores are on the list of those to be sold and the rest are under the Safeway brand.

As part of the $2.9 billion deal with New Hampshire-based C&S, Albertsons stores will retain the Safeway sign in Colorado. The distribution company will be able to continue selling some of Albertsons’ private brands. And despite contrary testimony from a state witness, C&S will have the staff and resources necessary to take over the stores, defense attorneys said.

Roger Davidson, an industry consultant and state witness, believes the stores bought by C&S will see a decline in revenue and some will likely close. He previously testified that C&S does not have the “retail backbone” or staff to compete with Kroger.

During closing arguments, Attorney Wolf questioned Davidson’s conclusions and accused him of lying about his academic credentials and having a conflict of interest due to his business connections. He also attacked an analysis by another state witness, Nitin Dua, whose testimony downplayed Costco, Amazon and other national chains as serious competitors to Kroger and Albertsons.

Biller criticized a defense expert’s modeling of competitors as unstable and producing “absurd results.”

Also at stake in the lawsuit is a $1 million civil penalty that Weiser seeks from each grocer for what he calls non-solicitation and non-poaching agreements during a 2022 strike against King Soopers. He said his office found emails while reviewing documents that showed Albertsons agreed not to hire any King Soopers employees or solicit customers from its rival pharmacies during the strike.

The two companies have said that no such agreement existed.

United Food and Commercial Workers Local 7, which represents grocery workers in Colorado and Wyoming, is part of a coalition of unions fighting against the merger, which was announced in 2022.

Albertsons and Kroger executives said stores will not close and frontline workers will not lose their jobs if the merger is approved. But union members notice the consequences of Albertsons’ purchase of Safeway in 2015. Haggen Food and Pharmacy, a small supermarket chain based in Washington state, bought some of the stores and within a year filed for bankruptcy. More than 100 stores and thousands of workers lost their jobs.

A decision is pending in a lawsuit in Oregon in which the Federal Trade Commission sued to block the merger until it can resolve its administrative complaint against Kroger and Albertsons. The attorneys general of Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming joined the lawsuit.

The Washington state judge in the case is expected to rule during a hearing on Nov. 15.

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Originally Posted: October 24, 2024 at 6:05 p.m.