Kroger-Albertsons merger hits roadblock in Washington state, Albertsons challenges ‘meritless’ anti-competitive claims

The mega-merger between the second- and fourth-largest grocery retailers has drawn criticism from multiple state lawmakers who argue that the deal is creating an anti-competitive monopoly in the US grocery market, giving it leverage to raise prices and consolidate its workforce negatively impacting both workers and consumers.

Multiple state attorneys general filed a joint suit* taking aim at the “unusual”​ $4bn special dividend payout to Albertsons’ investors as part of the deal (originally scheduled to be paid on Nov. 7, 2022). The suit claimed that the amount is 57 times as large as the most recent quarterly dividend issued by Albertsons in October 2022, raising alarm bells among state lawmakers opposed to the deal.

In order to pay shareholders the dividend, Albertsons would need to use 75% of its liquid assets and borrow $1.5bn, claimed the Washington State AG’s office. 

In its motion for a temporary restraining order​​, it said, “Albertsons and Kroger are direct competitors that collectively own and operate almost 350 grocery stores in Washington State. Albertsons’ payment of the dividend will impact its ability to compete and impair competitors in grocery retail through Washington State.”​

The restraining order was granted, temporarily restraining Albertsons from issuing its pre-closing special dividend to shareholders until Nov. 10, 2022, when a motion for a preliminary injunction will be heard.

“By eliminating its cash-on-hand and nearly doubling its debt, Albertsons will be in a weakened competitive position relative to Kroger, thereby harming grocery consumers and workers throughout Washington,”​ said State Court Commissioner Henry Judson.