Colorado AG fighting proposed Kroger-Albertsons merger. Here's how it may impact Pueblo

Editor's note: This story was updated on Feb. 16 to include statements from Kroger.

Colorado Attorney General Phil Weiser filed a lawsuit Wednesday to block the proposed $24.6 billion merger between Kroger and Albertsons, two of the state’s largest grocery chains.

In a news release, Weiser said he believes the merger would eliminate competition between Kroger and Albertsons and consolidate a concentrated market, which would hurt the state’s shoppers, workers and suppliers.

Weiser held a town hall in Pueblo last year to hear residents’ concerns about the proposed merger.  A few people shared their worries the merger would drive up prices and greatly impact low-income residents.

Their statements echoed similar concerns that Pueblo citizens and leaders delivered when the merger was first announced in October 2022.

The Pueblo town hall was one of nearly 20 that the attorney general hosted in 2023 across Colorado while he reviewed the details of the supermarkets’ plan and its potential impact to shoppers. He received more than 6,100 responses to an online survey about the merger.

Kroger operates 148 stores in Colorado, all of which are King Soopers and City Market locations. Albertsons manages 105 Safeway Albertsons stores in the state.

“Coloradans are concerned about undue consolidation and its harmful impacts on consumers, workers, and suppliers,” Weiser said in the release. “After 19 town halls across the state, I am convinced that Coloradans think this merger between the two supermarket chains would lead to stores closing, higher prices, fewer jobs, worse customer service, and less resilient supply chains.”

In an issued statement, Kroger said it was "disappointed" in Weiser's decision to file the lawsuit and that it will defend the proposed merger in court because it would result in the "best outcomes for Colorado consumers."

"Blocking this merger would only serve to strengthen larger, non-unionized retailers like Walmart, Costco and Amazon, by allowing them to maintain and increase their overwhelming and growing dominance of the grocery industry," a Kroger spokesperson said in the statement.

"In contrast, Kroger and Albertsons companies merging will bring lower prices to more customers, strengthen and create good-paying union jobs, and bring more fresh, affordable food to more communities.”

Kroger and Albertsons in their initial announcement said the merger would help them lower prices for customers. Their CEOs later said they would not lay off frontline associates and could better compete with Walmart and Costco if the merger went through.

However, Weiser argued that a merger would allow Kroger to raise prices and “pinch” consumers, particularly in urban areas where customers shop close to home. Shoppers in non-urban parts of the state would have to drive further to reach a non-Kroger store, “leaving them at the peril of their supply chain failing,” he said.

In Pueblo, there is concern that at least one of the city’s Kroger locations would close if a merger were to occur.

It’s a scenario that some of the city’s leaders fear, especially after the closure of Safeway on the East Side left the area without a grocery store. The East Side has Sunny Side Market, a food pantry operated by Care and Share.

Weiser also suing companies for “no-poach” agreement

Weiser argues that Kroger and Albertson violated the Colorado State Antitrust Act when they entered into a “no-poach” agreement before a 10-day King Soopers strike among employees and shoppers in 2022.

An email between the company’s executives showed that Albertsons agreed it wouldn’t hire any King Soopers employees and solicit any of the latter’s pharmacy customers, Weiser said. King Soopers was concerned it would lose employees to Safeway during the strike, he said.

“No-poach agreements stifle worker mobility and depress wages and non-solicitation agreements harm consumers and raise prices,” Weiser said.

In a separate statement, Kroger said Weiser "mischaracterized" facts and claimed there has been no such agreement between the two companies.

"Employees at both companies regularly join our teams from — and exit our companies for opportunities to work at — Albertsons, Kroger, Walmart, Amazon, Costco and other retailers as well as restaurants, food service companies, convenience stores, warehouses and more," Kroger said in its statement.

Weiser’s lawsuit seeks $1 million each from Kroger and Albertsons for their roles in the agreement and to bar them from entering or enforcing into such arrangements.

Weiser called companies’ divestiture proposal 'inadequate'

To help secure the merger, Kroger and Albertsons have proposed to sell more than 400 stores to C&S Wholesale Grocers, a smaller wholesale supplier that operates 23 stores nationwide. C&S would acquire more than 50 Albertsons locations as part of the divestiture plan.

The proposal is an effort to boost competition, but Weiser argues that it’s “inadequate” because “it would not alleviate the anticompetitive effects of the merger.”

Furthermore, the proposal would repeat problems that former divestiture plans had because C&S does not have enough retail grocery experience to take on that many stores and would not effectively compete with Kroger post-merger, Weiser said. Also, C&S would be temporarily too reliant on Kroger for pricing, pharmacy and promotions, among other areas, which would diminish competition between them, he said.

Weiser is the second attorney general in the U.S. to file a lawsuit opposing the proposed merger. Washington’s AG Bob Ferguson filed his lawsuit last month, saying that the consolidation between the supermarkets would “severely” limit shopping options for customers and erase competition that helps keep grocery prices low.

The Federal Trade Commission is reviewing the companies’ proposed merger.

More: Pueblo sheriff's office debuts new VR training system. It's the first of its kind in Colorado

Chieftain reporter Josué Perez can be reached at JHPerez@gannett.com. Follow him on X, formerly Twitter, at @josuepwrites. Support local news, subscribe to The Pueblo Chieftain at subscribe.chieftain.com.

This article originally appeared on The Pueblo Chieftain: How Colorado AG's lawsuit to block grocery merger could impact Pueblo