Colorado sues to stop $25 billion Kroger-Albertsons merger

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By Mike Scarcella

(Reuters) - Colorado’s attorney general filed a lawsuit on Wednesday seeking to block Kroger's proposed $25 billion acquisition of rival supermarket chain Albertsons, saying consumers would be hurt, as the U.S. Federal Trade Commission and other states continue to scrutinize the deal.

Attorney General Phil Weiser in a statement said the proposed transaction, first announced in 2022, “would lead to stores closing, higher prices, fewer jobs, worse customer service, and less resilient supply chains.”

Kroger and Albertsons are two of Colorado's largest grocery chains, Weiser’s office said. Kroger runs 148 King Soopers and City Market stores, and Albertsons operates 105 Safeway and Albertsons stores in the state.

The companies defended the proposed deal as pro-competitive, saying in a statement they were “disappointed in Attorney General Weiser’s premature decision to file a lawsuit while the merger is still under regulatory review” by the FTC.

The companies said they would "vigorously defend this in court" and said they are "in active dialogue" with the FTC and unnamed state attorneys general.

Colorado's lawsuit, filed in state court in Denver, is the second filed by a state attorney general challenging the merger.

Washington state’s attorney general sued over the deal in January. The California attorney general’s office said in October it was weighing whether the deal violated competition law but has not taken action.

Colorado's lawsuit also challenged what it said were unlawful agreements restricting hiring between Kroger and Albertsons.

Kroger has proposed to divest more than 400 stores and eight distribution centers to C&S Wholesale Grocers to allay antitrust concerns over the deal.

Kroger and Albertsons in January said they were pushing back their anticipated closure until later in the year.

A U.S. federal judge in December dismissed a consumer class action in California court that challenged the deal.

(Reporting by Mike Scarcella; Editing by David Bario and Leslie Adler)