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Kroger: Consumer suit lacks ‘real-world facts’
Legal team wants the consumer case to be thrown out
3 Min Read
Kroger wants a U.S. judge to toss out a consumer antitrust lawsuit on the Kroger, Albertsons merger because the case lacks “real-world facts.”
That is what the Kroger legal team is claiming in the California federal court, according to a Reuters report. Lawyers believe the group who filed the lawsuit over the $24.6 billion deal have failed to define the relevant market necessary to evaluate grocery store competition and to identify how the acquisition would hurt consumers. A hearing is still set for May 18.
U.S. antitrust law makes private actions against mergers and acquisitions possible. Twenty-five consumers in states that include California, Texas and Florida are going after Kroger and Albertsons. The Federal Trade Commission is still reviewing the deal as are state antitrust enforcers.
Kroger and Albertsons’ defense continues to be that the merger will force both grocers to close stores, and that number could be more than originally thought. Albertsons legal team also want the judge to dismiss a claim challenging the propriety of a $4 billion special dividend that the company paid to shareholders.
Earlier this week the CEO of Sprouts Farmers Market said he’s not concerned about the potential $24.6 billion merger of Kroger and Albertsons affecting his company, and he doesn’t know how much it will actually help the two chains compete against Walmart, according to reporting from the Phoenix Business Journal.
According to Sprouts CEO Jack Sinclair, who made the remarks at a recent event at Arizona State University, the Phoenix-based specialty grocery chain operates in a completely different side of the grocery industry than Fry’s Food Stores, Albertsons and Safeway – the companies owned in the Phoenix metropolitan area by Kroger and Albertsons.
“I think it is neutral to us. If they drop the price of Tide or Coca-Cola it is not going to affect us. We don’t sell that anyway,” Sinclair said, according to reporting from the Phoenix Business Journal. “Maybe I’m a little bit naive, but I don’t think it is going to bother us very much.”
At the April 5 event, where Sinclair was being honored as “Executive of the Year” by the Economic Club of Phoenix, the Sprouts CEO seemed skeptical about the benefits of the merger.
Prior to joining Sprouts, Sinclair spent several years working for Walmart, and he isn’t sure how the Kroger, Albertsons merger will ultimately rival his former employer.
“I’m not sure putting two big things together to make a bigger thing, but still smaller than Walmart, is going to do anything,” Sinclair said at the event. “I don’t know how that unravels itself. There will be some efficiencies the customer gets, but it will still be more expensive than Walmart.”
Sinclair noted that U.S. food retail is a $1.2 trillion industry, and he wants Sprouts to get some $200 billion per year of that pie, ultimately.
“We are only at $6 billion at the moment, I only need a few crumbs at the table,” Sinclair said. “We paddle our own canoe, and we just do our own thing.”
Supermarket News recently released a three-part op-ed on the deal, and the latest appeared this week.
