A federal judge in Oregon, and a Washington state judge, both independently ruled Tuesday against what would have been the largest merger of two grocery store giants: the joining of Albertsons and Kroger.
Had the merger gone through, it would have led to the loss of Safeway stores on the South Hill and Spokane Valley, based on a previously released list of store sales.
The two grocery companies first announced in 2022 merger plans to get bigger to take on retail competitors Amazon and Walmart.
That proposed merger spawned lawsuits from the attorneys general of Washington and Colorado, and the Federal Trade Commissioned filed a federal suit in Oregon. All sought to block the deal over concerns that it would reduce customer choices and bargaining positions of employees across the country.
On Tuesday, U.S. District Judge Adrienne Nelson of Oregon ruled on the lawsuit brought by the FTC. Nelson issued a preliminary injunction blocking it.
“Although defendants may choose to abandon the merger because of the preliminary injunction, this order in no way forces them to do so, and leaves open the possibility that they may pursue the merger at a later date should it be deemed lawful in the administrative proceedings,” Nelson wrote. “An injunction simply pauses the merger.
“Any harms defendants experience as a result of the injunction do not overcome the strong public interest in the enforcement of antitrust law, especially given the difficulty in disentangling a premature merger.”
The Washington state case met a similar end.
Ruling from the bench before a packed courtroom, King County Superior Court Judge Marshall Ferguson said that “the effect of that merger may be to substantially lessen competition in Washington,” according to the Seattle Times.
“In short, the court blocks the merger,” the judge said in the Seattle courtroom.
U.S. Sen. Maria Cantwell, D-Wash., applauded both legal decisions.
“The Courts found what we have seen in Washington state: Large-scale grocery store mergers like this one are more likely to raise grocery prices than provide any real benefits to shoppers. And right now we need to keep taking steps to lower costs,” Cantwell said in a news release.
The United Food and Commercial Workers International Union, which represents more than 100,000 grocery store employees at Albertsons and Kroger in 14 states, including hundreds of workers in the Spokane area, hailed both rulings as victories.
Kaye Guenther, president of UFCW 3000, said Ferguson’s ruling “is good for workers, it’s good for consumers.”
In a telephone interview, Guenther said “we just think it’s so important for everyday consumers and workers that we can assess what we need in our communities and can decide whether we want companies to merge together or not.”
Both cases included multiple examples of how the merger would have harmed both consumers and workers, she said.
“You want that kind of competition. You want stores trying to compete for your business,” she said. “The bigger they get, the more they control prices.”
A third case challenging the grocery store merger remains pending in Colorado. Regardless, the FTC challenge and Washington ruling are “very significant,” Guenther said.
“It would not have been good for rural communities or farmers. As a company gets so big, they can set prices for farmers,” she said. “They have a hard time negotiating against these big companies as well.”
The merger could have also made it harder for workers to bargain for better pay and benefits, she said.
“We represent the Albertsons, Fred Meyer and Rosauers workers on the east side of the state. Sometimes we can force Albertsons to a deal and compel Kroger to give the same deal,” she said. “So, it’s just extremely important for a healthy community to have multiple employers competing for workers and customers.”
Kroger is based in Cincinnati and owns a family of 2,750 stores, including Fred Meyer, King Soopers and QFC, to name a few. Efforts to reach Kroger officials Tuesday afternoon were not immediately successful.
Albertsons is based in Boise and owns a separate group of 2,200 stores, including Safeway, Vons, Tom Thumb and Kings Food Markets. Albertsons spokeswoman Danielle Berg said the company was disappointed with the federal judge’s decision.
“We believe we clearly outlined during the proceedings how the proposed merger would expand competition, lower prices, increase associate wages, protect union jobs, and enhance customers’ shopping experience,” Berg said in an emailed statement. “We are carefully reviewing the Court’s opinion and are evaluating our options in accordance with the merger agreement.”
As part of the merger, Kroger and Albertsons proposed selling 579 stores to New Hampshire-based C&S Wholesale Grocers.
That list would have included two Safeways in the Spokane area, the stores at 2509 E. 29th Ave. and 14020 E. Sprague Ave.
The list also included scores of stores on the state’s West Side.
Other than the two Spokane locations, the closest other store on the list was a Safeway in Yakima. None of the three area Fred Meyer stores was named on the divestiture list.
Targeted stores included 10 locations in Idaho, but none was located in the Coeur d’Alene area.
Many of the employees who work at those stores are members of the UCFW 3000. It covers workers who live in a geographical region that includes all of Washington east of the Cascades, northeast Oregon and North Idaho.
Guenther noted that Kroger had put aside $13 billion in cash to pay Albertsons shareholders had the merger gone through.
She said Kroger should invest in its stores to shorten lines and fix broken equipment.
“If they do that, it brings customers in and they are more profitable,” Guenther said. “Put the money in the stores, and the customers will come in.”
The union led a Stop the Merger coalition that included more than 100 organizations that were opposed to the proposed merger.
“We are extremely happy with both the state decision and the federal decision today,” Guenther said. “We are waiting for Colorado and are hoping to get a trifecta.”
