Kroger and Albertsons announced their $24.6 billion merger in early 2023, and their proposed deal has been under siege ever since. Critics argue it would fuse America’s two top supermarket chains into a 700,000-employee grocery leviathan that operates more than a dozen subsidiaries—including Safeway, Harris Teeter, Fred Meyer, Tom Thumb, Ralphs, Jewel-Osco, and King Soopers, among others. (Walmart and Costco sell more groceries but are considered a discounter and warehouse club, respectively.)
Since the year started, the attorneys general in two states—Colorado and Washington—have filed motions to block the merger, arguing it’s too big and would set off a domino effect: Food prices would go up, quality would go down, consumers would find fewer options, suppliers would be paid less, and workers would see wages reduced.
Kroger and Albertsons certainly anticipated that line of attack, and the incoming volleys aren’t even over yet: Bloomberg reported Tuesday that the Federal Trade Commission and additional states are poised to sue to stop the merger as early as next week, in what antitrust experts call a sort of death-by-a-thousand-cuts legal strategy, since the companies would need to prevail in each case.
But experts are saying the latest lawsuit—Colorado’s, filed last week—has the potential to draw a different kind of blood, because of details that enforcers have uncovered during their merger investigation that go beyond the proposal itself. Opponents circling the troubled merger say it has the markings of criminal activity by the two companies.
“Despite being competitors, Kroger and ACI [Albertsons Companies Inc.] have already colluded to suppress the wages and benefits of workers,” Phil Weiser, Colorado’s attorney general, wrote in his new complaint. He asserts the companies struck “a nefarious bargain” to ensure that workers who went on strike at 78 unionized King Soopers locations in Colorado wouldn’t find jobs at Albertsons, potentially pulling customers with them.
Both grocery chains—particularly Kroger—have a history of aggressively opposing attempts to organize their stores. Previous strategies have included closing unionized stores “for a period of time to make them nonunion.” But a different tactic might be to contact your biggest rivals and temporarily push to undercut workers’ leverage. That is what Weiser contends Kroger and Albertsons did in 2022, when King Soopers employees briefly went on strike. Weiser’s complaint argues: “The companies agreed that for the duration of the strike [Albertsons] would not hire [Kroger’s] King Soopers employees, and that [Albertsons] would not solicit King Soopers pharmacy customers.”
That January—which was nine months before the companies announced plans to combine—Albertsons’ SVP of labor relations emailed his Kroger counterpart to discuss hiring practices. “We don’t intend to hire any King Soopers employees,” he wrote, “and we have already advised the Safeway division of our position and the division agrees.” (Safeway is a big Albertsons-owned grocer out West.)
An Albertsons executive forwarded that email to the rest of his colleagues, saying, “Let’s make sure the Denver team understands,” then cautioning: “Please don’t forward the email.” Later, during premerger review talks with the FTC, a third Albertsons executive confirmed they’d made this agreement, because Albertsons needed “Kroger to hold the line” in its own union negotiations.
Weiser argues that if Albertsons helped Kroger out, both sides understood this action “restrained the ability of Kroger’s striking employees to find alternative employment and leave Kroger, which strengthened Kroger’s ability to resist union demands at the negotiating table.”
Weiser claims the existence of this agreement was relayed “to the very highest levels of Kroger,” from the general counsel on up to CEO Rodney McMullen directly. “This was not the first instance of collusion between Kroger and [Albertsons],” the attorney general’s lawsuit adds, quoting Albertsons comparing the situation to “Portland.”
Kroger denies that any illegal agreements have ever existed between the companies. In a statement to Fast Company, the chain called it “disheartening for Coloradans” that their state’s attorney general “would mischaracterize the facts,” adding: “There was not then, and there is not now, non-solicitation or so-called no-poach agreements between Kroger and Albertsons.” When Weiser’s complaint was filed last week, Kroger issued a separate statement calling the move “premature,” since “the merger is still under regulatory review,” and saying that blocking the deal “would only serve to strengthen larger, nonunionized retailers like Walmart, Costco, and Amazon.”
Albertsons didn’t issue a statement, but a source close to the company said Weiser’s lawsuit elided key details. Albertsons wasn’t colluding against unionized workers, this person explained, but rather was reiterating a common policy of not hiring other companies’ workers who go on strike. It is reportedly the belief at Albertsons that the union in question—the United Food and Commercial Workers International Union (UFCW)—had urged striking King Soopers employees to work at Albertsons temporarily so that UFCW wouldn’t deplete its strike fund.
These are claims a court would get to the bottom of, but what stands out is how Weiser isn’t merely attempting to block the merger itself; his complaint also asks the court to fine Kroger and Albertsons for violating Colorado law. The fines would be pennies for a pair of companies that together control 15% of the U.S. grocery business and whose combined revenue is $200 billion. But if a judge found they had indeed colluded here, it could tee up a bigger headache for the two companies, spanning from criminal liability to an antitrust class-action lawsuit.
