Kroger-Albertsons $4 Billion Payout Blocked While FTC Reviews Merger

The $4 billion payout that was part of the proposed merger between Kroger and Albertsons — the two largest supermarket operators in the country — was temporarily blocked by a judge in Washington state, after several state attorneys general filed similar motions urging the courts to delay the merger to allow the Federal Trade Commission to complete a full review.

King County Superior Court Commissioner Henry Judson approved the motion filed by Washington Attorney General Bob Ferguson on Thursday, putting a hold on the payout until the courts can fully vet whether the $4 billion payment to stockholders violates antitrust laws.

California Attorney General Rob Bonta had been pushing for the delay for the past week, joining five other state attorneys general in signing a letter on October 26 urging the payment to be stopped, and then filing a motion in federal court alongside the state attorneys general of Illinois and Washington, D.C., on Wednesday.

“Their proposed merger requires careful review — to ensure their customers and employees do not pay a price through higher grocery bills, food deserts, and lower wages,” Bonta said in a statement released last week. “My colleagues and I demand that Albertsons delay its planned $4 billion payout to investors until review of the proposed merger is complete. I, frankly, have a hard time seeing how Albertsons would be able to continue to compete — as it is obliged to do during the pendency of merger review — after giving away a third of its market share.” 

Kroger is the biggest supermarket chain in the country, with more than 420,000 employees in 2,700 stores across the country. Combined with Albertsons, the two have more than 700,000 employees. Opponents to the merger worry that the companies would be forced to sell hundreds of locations in regions with too much market overlap, which could include up to 350 locations on the West Coast.

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In a statement announcing the motion to block the payout on Wednesday, Bonta said the state attorneys general are “dedicated to ensuring that the proposed merger of these grocery behemoths complies with federal and state antitrust law, and does not result in higher prices for consumers, suppressed wages for workers, or other anticompetitive effects.”

Bonta cited the federal Sherman Act, which forbids parties from entering into agreements that “substantially lessen competition or unreasonably restrain trade.”

The local United Food and Commercial Workers union chapter, UFCW 770, joined five other chapters and Teamsters 38 in supporting the motions by Bonta and Ferguson in a statement released on Wednesday.

“This dividend would cripple Albertsons’ ability to operate its stores, threatening the jobs of thousands of essential workers and making groceries more expensive and scarce for millions of families,” said Kathy Finn, UFCW Local 770 president. “Albertsons should be lowering prices for hard-working people and investing in essential workers instead of wiping out the company’s cash and doubling its debt to fatten executives’ pocketbooks.” 

The proposed payment of $4 billion to investors was scheduled to take place Monday, but now the dividend will be delayed until courts fully vet the merger.

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