Albertsons and Kroger CEOs testify in pivotal trial over $24.6 billion merger

The heads of Albertsons and Kroger took the stand today in a trial that will decide if a massive merger between the two companies can move forward.

If allowed to continue, it would be the largest supermarket merger in U.S. history but there have been multiple legal challenges, and the case is also in federal court as authorities decide whether or not the merger is legal.

In the latest turn of a legal battle to determine if Kroger and Albertsons can forge ahead with a planned $24.6 billion merger the CEOs of both grocers took the stand Monday to make their case.

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“I have deep concerns when I look forward about our competitive condition,” Vivek Sankaran, CEO of Albertsons, said during his testimony. “If you don’t fundamentally change your competitive condition as you look out two, three, four years, your financial condition will deteriorate.”

Sankaran painted a picture of a highly competitive landscape in the industry that’s put the company in the position of needing this merger to continue to compete and thrive.

“I’m losing more of our customers’ dollars to Costco and Walmart than to Kroger,” Sankaran said. “The types of funds on a more sustainable basis to invest in the types of things that make the combined company more competitive to the Amazons and the Walmarts and the Costcos of the world.”

Washington state has sued to block the merger with the Attorney General’s office alleging this proposed merger is anti-competitive and will have negative effects on employees and customers including raising prices.

The Attorney General’s office also says Washington residents would feel the impact more than any other state, given Albertsons and Kroger own more than 300 stores here and control more than half the grocery sales in the state.

But Kroger disputes that, saying they would start lowering prices starting on day one of the merger with a plan to reduce prices on 650 items within 90 days.

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If the merger goes through, Kroger and Albertsons plan to sell 579 overlapping stores, including 124 in Washington state, to ease regulator concerns, but there are concerns the proposed buyer of those stores is not equipped to run the stores.

Attorneys with the Attorney General’s office also questioned if Albertsons truly needs this merger given their strong financial position in recent years, noting the company’s CEO is set to end up with $43 million if the merger goes through, with the bulk of that coming from the sale of his company shares.

A temporary order to block the merger is being considered in federal court in Oregon. Closing arguments in that case wrapped up last week and is now awaiting a judge’s decision. There is also another legal challenge to the merger out of Colorado.

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