Colorado AG: C&S will sell off divested stores if Kroger acquires Albertsons

Kroger and Albertsons attorneys appeared before a third judge on Monday in the first day of the antitrust case in a district court in Denver, Colo. 

https://www.supermarketnews.com/mergers-acquisitions/colorado-case-against-kroger-albertsons-merger-begins 

It’s the third lawsuit — this one brought by Colorado Attorney General Phil Weiser — the two grocers face in their effort to complete their $24.6 billion merger. 

That plan includes the divestiture of 579 stores to C&S Wholesale Grocers, but the state of Colorado argued on Monday that the wholesale company, which operates about two dozen grocery stores, will likely sell the divested locations, according to a story in the Cincinnati Enquirer. 

Assistant Attorney General Arthur Biller argued that C&S would liquidate after purchasing the locations. 

“They are opportunistic buyers…there’s no intention of running those stores long-term,” Biller said, according to the Cincinnati Enquirer story. “Kroger picked a buyer that wouldn’t put up much competition.”

Kroger and Albertsons attorneys have argued in the other two cases — the grocers have also been challenged separately by Washington Attorney General Ferguson and by the FTC and nine AGs across the country — C&S Wholesale is ready to take on the nearly 600 supermarket locations. 

In early September, the two grocers told a district court judge in Portland, Ore., that Albertsons Chief Operating Office Susan Morris would become president and CEO of retail at C&S Wholesale Grocers if the merger deal is approved. 

Kroger attorney Matt Wolf said on Monday that the assertion that C&S would later offload the locations is a “conspiracy theory,” according to the Cincinnati Enquirer.

“Buying something for $3 billion and selling it for $2 billion is not a very good business plan,” Wolf told the court.

The court case is expected to take about three weeks.

Colorado also has accused Kroger and Albertsons of violating state antitrust law in 2022, when Kroger-owned King Soopers employees went on strike. The state alleges that the two grocers colluded by agreeing to not poach workers or steal pharmacy customers during the strike. 

The state seeks $1 million from each grocer for violating state law. Both retailers have denied the accusations. 
“There were no non-solicitation or so-called no-poach agreements between Kroger and Albertsons,” a Kroger spokesperson said in an email to Supermarket News. “Kroger competes for talent in a broad and diverse labor market, including from non-grocery, non-union retailers like restaurants, food service companies, conveniences, warehouses, and more. In fact, data shows that only 1-2.5% of Kroger associates come from and/or move to Albertsons.”