Albertsons, the parent company of United Supermarkets, United Marketstreet, United Express, Albertsons Market, and Amigos, has filed a lawsuit against Kroger following the collapse of their proposed $25 billion merger. The legal action, announced on Wednesday, December 11, comes after a federal district judge in Oregon blocked the deal, citing potential harm to consumers and competition.
Locally, the United Family operates under five banners, totaling 96 stores in 54 communities. In 2013, the United Family was purchased by Albertsons.
Albertsons Seeks Billions in Damages
In its lawsuit, Albertsons accuses Kroger of failing to take the necessary steps to secure regulatory approval for the merger. The grocery chain claims this breach of the merger agreement caused significant financial and operational strain.
“Albertsons is seeking billions of dollars in damages from Kroger to make Albertsons and its shareholders whole,” the company stated. The demand includes the $600 million termination fee stipulated in the merger agreement, as well as additional compensation for “multiple years and hundreds of millions of dollars” spent pursuing the deal. Albertsons also pointed to the “extended period of unnecessary limbo” it endured due to Kroger’s alleged failures.
The Largest U.S. Grocery Merger That Never Happened
The merger, first announced in October 2022, aimed to create the largest supermarket chain in U.S. history, combining roughly 5,000 stores under one corporate umbrella. The companies argued the consolidation would enhance their ability to compete against retail giants Amazon and Walmart, both of which have made significant investments in the grocery sector.
However, the deal faced intense scrutiny from regulators, lawmakers, and consumer advocates concerned about its potential to stifle competition, drive up prices, and reduce consumer choice.
Judge Blocks the Deal
On Tuesday, December 10, District Judge Adrienne Nelson ruled against the merger. Nelson rejected the companies’ argument that the deal would help them compete with Amazon, emphasizing that traditional grocery stores play a distinct and critical role in the marketplace.
“The merger’s impact on competition must not be underestimated,” Nelson said. She added that the proposed consolidation would likely harm consumers by reducing options and increasing prices, particularly in regions where the two chains overlap.
Albertsons’ Allegations
Albertsons’ lawsuit alleges Kroger “willfully breached the Merger Agreement in several key ways,” including:
Failing to divest assets necessary for antitrust approval. Albertsons claims Kroger disregarded feedback from regulators on which stores to sell or close to address competition concerns.
Ignoring stronger divestiture buyers. According to the complaint, Kroger declined offers from potential buyers who could have eased regulatory concerns.
Lack of cooperation. Albertsons asserts that Kroger refused to fully collaborate on securing the required approvals.
Kroger’s Response Pending
As of Wednesday afternoon, Kroger has not publicly commented on the lawsuit.
Industry Implications
The failed merger highlights the growing tension between consolidation in the grocery industry and antitrust enforcement aimed at preserving competition. The case also underscores the challenges faced by traditional grocers in an evolving market increasingly dominated by e-commerce and retail behemoths like Amazon and Walmart.
