Kroger

State attorneys general call for a closer look at the proposed Kroger-Albertsons merger

AGs from a half dozen states are threatening legal action if Albertsons does not put the brakes on its planned “special dividend” payout of nearly $4 billion slated to go to shareholders next month.
Albertsons
Attorneys general from around the country are calling for an investigation into the proposed Kroger-Albertsons merger. / Photo: Shutterstock

Washington D.C.’s attorney general is leading a group of a half dozen state attorneys general calling for an investigation into the proposed $24.6 billion mega-merger between Kroger and Albertsons, according to a statement released Wednesday.

Washington D.C. Attorney General Karl Racine said his office is launching a formal investigation into the proposed grocery merger and its impact on workers and shoppers.

The group of attorneys general is also calling on Albertsons to put the brakes on paying out nearly $4 billion in shareholder dividends until the review is complete—and threatening legal action if the retailer does not comply.

“Anticompetitive mergers have real impacts on everyday people,” Racine said. “We’re deeply concerned about the level of concentration in essential industries, such as grocery stores. And we’re asking Albertsons to not proceed with the payout while we thoroughly assess whether this merger is anti-competitive, anti-consumer, or anti-worker. While we trust that Albertsons will adhere to our request, we are actively exploring other options to achieve our objectives, including litigation.”

In announcing the proposed merger earlier this month, Albertsons said it intended to pay out a special dividend of $6.85 per share, or nearly $4 billion, to its shareholders on Nov. 7.

Racine said that significant payout could limit Albertsons’ ability to operate and compete with Kroger, which could potentially “impact consumers, workers and the grocery industry writ-large before regulators even have the chance to review the deal.”

The attorneys general of Arizona, California, Idaho, Illinois and Washington State joined Racine in signing the bipartisan letter requesting that Albertsons delay payment of the special dividend until states have reviewed the merger.

The letter noted that grocery prices have risen 12.2% in the last year, the biggest increase in 40 years. It also called out the potential impacts of the merger on the more than 710,000 workers employed by the two retailers.

“If the proposed merger has anticompetitive effects, nearly every corner of the country will see them,” the attorneys general wrote, adding that regulatory approval of the merger is “far from assured.”

The letter, sent to the CEOs of Kroger and Albertsons, seeks a response from Albertsons by 5 p.m. Friday about whether it will honor the attorneys general’s request to postpone payment of the special dividend.

In a statement Wednesday, leaders of seven UFCW locals applauded the actions of the attorneys general.

“We expect the CEOs to respond positively to the attorneys general by the end of the day on Friday and stop the issuance of the special dividend,” said the UFCW, which represents 1.3 million workers at grocery stores and other industries. “Any effort to rush this payment threatens thousands of jobs of essential grocery store workers and millions of shoppers who would suffer from reduced competition, reduced choice and increased costs in markets across the United States.”

A senate panel is slated to discuss the proposed merger next month.

Amy Klobuchar (D-Minnesota) and Mike Lee (R-Utah) serve on the Senate Judiciary Subcommittee on Competition Policy, Antitrust and Consumer Rights. The two said last week that they have “serious concerns” about the proposed Kroger-Albertsons merger.

“The grocery industry is essential, and we must ensure that it remains competitive so that American families can afford to put food on the table,” the senators said in a statement. “We will hold a hearing focused on this proposed merger and the consequences consumers may face if this deal moves forward.”

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