Our Terms & Conditions | Our Privacy Policy
Colorado trial over Kroger-Albertsons merger wraps up; decision still few weeks away | Business
After nearly four weeks, the trial between Colorado and the main players of a $24.6 billion grocery merger deal is over.
Next, it’ll be in the hands of a Denver District Court judge to decide on the fate of the merger — that’s if another court doesn’t settle the issue first.
On Thursday, attorneys for the state and Kroger, Albertsons and C&S Wholesale Grocers presented their closing arguments to Denver District Court Judge Andrew Luxen. After the trial, the judge will rule on whether or not to block the merger with a permanent injunction.
Kroger is the parent company of Colorado’s King Soopers and City Market chains and operates about 150 stores across the state. It’s trying to merge with Safeway’s parent company Albertsons, which has 105 Colorado stores.
In the proposed merger deal, Kroger would acquire 14 stores across the state and divest 91 to C&S Wholesale Grocers.
It’s the third and final trial brought forth by state and federal regulators who believe the merger is anticompetitive and harmful for consumers.
Washington state’s case against the grocers also wrapped up this week with closing arguments Wednesday. Judge Marshall Ferguson set a hearing for Nov. 15 to announce his decision. The Oregon judge presiding over the Federal Trade Commission’s lawsuit has not yet decided the case, nor has he given a timeline.
What happens to Colorado’s Kroger-Albertsons merger trial if other cases finish first
It’s not clear when Luxen will make his decision for Colorado’s case, but it won’t be for another few weeks as attorneys have 14 days to submit post-trial briefs.
There were slight disagreements between lawyers for the state and the grocers over how competitively-sensitive information admitted into evidence — including from other companies not on trial — would be referenced in any court order.
Luxen said he wouldn’t draft a preliminary order for parties to review for redactions before having it publicly released as lawyers from both plaintiffs and defendants asked for.
“My position is I am responsible to spell out the reasons I make the decisions I make in this case, which includes me identifying the facts that I relied upon to do that,” Luxen said.
FILE PHOTO: A shopper exits a King Soopers grocery store on Capitol Hill in Denver.
Associated Press file photo
Closing arguments
Colorado Attorney General Phil Weiser announced in February the state would file a lawsuit against the merger and seek $1 million in civil penalties for the company allegedly having illegal “non-poach agreements” over workers and their prescriptions during the 2022 King Soopers strike.
Colorado Assistant Attorney General Arthur Biller presented the state’s closing arguments on Thursday.
He opened by stressing there’s already a concentrated grocery market in Colorado with three dominant players: Kroger, Albertsons and Walmart.
Kroger executives have testified Walmart is the biggest threat to the company, followed by Costco and Amazon. The state argued Kroger tracks Albertsons to set a price ceiling and Walmart for the floor, and without the ceiling, Kroger has more room to raise prices.
Who are King Soopers’ real competitors? Merger trial picks apart Colorado grocers
Success! Thank you for subscribing to our newsletter.
Kroger has repeatedly stated it would lower prices if the merger goes through as Albertsons sets prices about 10% to 12% higher on average. The grocer also explained that the larger infrastructure created by the merger would create more efficient operations to reduce prices.
The grocer’s lawyer Matt Wolf said Kroger is “monomaniacally focused on Walmart” for setting prices and the giant retailer would continue to keep Kroger’s prices in check after the merger.
“The antitrust laws were written to encourage, not obstruct, pro-consumer deals like the one before the court,” Wolf said. “And while Walmart and Costco and Amazon might be pleased with the state’s efforts today, grocery shoppers in Colorado will pay more and get less if the state has its way.”
The two parties disagreed on the definition of grocery competitors and the state of the market with the rise of e-commerce and changes accelerated during the pandemic.
Biller didn’t deny Walmart is a competitor but said other grocers like Costco, Trader Joe’s and Amazon aren’t sufficient replacements in the marketplace for consumers to an Albertsons or Safeway. He cited economist Nitin Dua with Bates White Economic Consulting, who testified last week about a study he conducted finding more than half of shoppers during the King Soopers strike in 2022 went to a nearby Safeway.
“Price is not the only aspect of competition,” Biller said. “Kroger and Albertsons compete on all aspects of the shopping experience, including fresh products, store quality, customer service and assortment.”’
Wolf criticized Dua’s analysis and the state’s portrayal of the grocery landscape saying it insufficiently defined markets by ZIP codes and city boundaries, saying no shopper chooses their store based on what ZIP code it is in. Biller said the point was a “distraction” and lines had to be drawn somewhere and Dua tested for sensitivities for stores near market boundaries.
Biller also cited a Kroger policy placed in select Colorado mountain towns called the “mountain no-comp zone” where there was little to no competition and it raised prices at City Market stores to cover inflation costs such as transportation and union wage negotiations, arguing the grocer looks for stores with less competition to raise prices. Kroger has retorted that it raised prices at some stores so as not to raise prices across all stores.
FILE PHOTO: Bryan Morton, right, with E & J Gallo Winery and Jim Ruffcorn with the Brown–Forman Distilleries company help stock aisle three with wine on Wednesday morning, March 1, 2023, at the Safeway grocery store on South Havana Street in Aurora, Colo. (Timothy Hurst/Denver Gazette)
Timothy Hurst/Denver Gazette
Biller added the divestiture buyer, C&S Wholesale Grocers, wouldn’t help maintain competition in the state because it would be smaller than Albertsons is today and would lack in infrastructure. Kroger’s lawyers stated it’s a seasoned company with decades of experience in the grocery industry.
The assistant attorney general cast doubt on C&S as a divestiture buyer, saying it has little retail experience and that the company is primarily a distribution company and “retail liquidator,” citing a history of buying stores to raise prices and sell for the real estate once customers began leaving.
C&S executives testified they learned from past failures of acquisitions and have asked for IT, distribution and labor infrastructure from Albertsons as part of the divestiture agreement to better handle the transition.
Albertsons argued its replacement, C&S, is not a retail liquidator citing their Chief Operating Officer Susan Morris’ testimony, a Denver-raised executive, saying she wouldn’t have accepted the offer to move over to become the divested stores’ “CEO of retail” if she believed the wholesale distributor was planning to close stores.
The state argued Kroger could have chosen another more experienced buyer and C&S hasn’t proven it could handle 579 stores nationwide, 91 of which are in Colorado.
Wolf said any other options bidding for the divestiture wouldn’t have protected union jobs.
Leaders for the Colorado chapter of the United Food and Commercial Workers International Union Local 7 have spoken out against the merger, saying they were worried it would lead to store closures and a loss of jobs.
Colorado’s anti-merger case began Sept. 30 and was originally scheduled to last three weeks, but was delayed by nearly a week.
If another judge for the other cases rules first, Colorado’s Attorney General Weiser said before the trial that the state would continue pursuing its lawsuit until Kroger and Albertsons fully backs out of the merger.
Denver Judge Luxen asked the parties to contact the Denver District Court if a judge in Portland or Seattle makes a ruling before he does within three days to set a date to discuss any consequences for the Colorado lawsuit.
Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.
Aggregated From –
Comments are closed.