Arizona launches antitrust investigation into Kroger-Albertsons merger

Arizona Attorney General Kris Mayes said her office will launch an antitrust investigation into the proposed Kroger-Albertsons merger, citing the potential impact on consumers, workers and farmers and ranchers in the state that supply the two companies’ stores.

“Hardworking Arizonans struggle daily to put fresh, healthy food on the table for their families and have already suffered through devastating price increases over the past year,” she said in a statement.

Mayes’ office joins other states around the country, including Colorado, California, and Washington, that have pledged to continue to investigate the proposed $24.6 billion merger. The deal, which was announced last October and is scheduled to close in early 2024, would be the largest in the history of the supermarket industry.

In addition to the state investigations, the Federal Trade Commission is in the midst of what is expected to be an in-depth antitrust review, and a group of consumers around the country have filed an antitrust lawsuit in California seeking to block the merger and reverse a special dividend payment of nearly $4 billion to Albertsons shareholders. Several regional produce organizations and the United Food and Commercial Workers Union have also voiced their opposition to the merger.

Related:Kroger, Albertsons discuss sale of 250-300 stores: report

“Our merger with Albertsons provides meaningful, measurable benefits to all stakeholders, including lowering prices, providing more choices and establishing a more competitive alternative to large, non-union retailers,” Kroger said in a statement provided to SN. “Kroger will not close any stores, distribution centers or manufacturing facilities as a result of this merger, including stores that may need to be divested to obtain regulatory approval. Kroger intends to position any store that is not part of the combined company for success going forward. The Company will work cooperatively with all interested parties as we work to complete the merger and unlock the many benefits it offers.”

In a statement on a website about the merger, Kroger CEO Rodney McMullen said the combined companies would “bring together two purpose-driven organizations to deliver superior value to customers, associates, communities and shareholders.”

Kroger and Albertsons have extensive overlap in Arizona, where Kroger operates the Smith’s and Fry’s Food and Drug banners and Albertsons has both Safeway and Albertsons locations. Together they operate more than 250 supermarkets in the state and account for almost half of the state’s grocery market sales, Mayes said. They also employ more than 35,000 Arizona workers.

The merger has the potential to increase prices for consumers and result in store closures, Mayes said, which could force consumers to travel farther for groceries and cerate food deserts.

“Thousands of employees will also wonder whether their jobs will still exist if the merger is finalized,” she said. “And even if they remain employed, workers may have to worry whether their wages or benefits will decrease.”

Farmers and ranchers in the state are also concerned that a combined Kroger-Albertsons might wield unfair buying power that would force them out of business in favor of corporate producers, Mayes said.

She said she plans to hold a series of listening sessions in the coming weeks across Arizona to hear directly from families and workers in communities that could be impacted by the proposed merger.

“The people of Arizona have important input to make here — people who live in the neighborhoods where a Fry's or a Safeway or a Smith's could be shut down,” she said in an interview with Capitol Media Services.