Denver District Court Judge Andrew J. Luxen rejected a motion by Kroger, owner of King Soopers, and Albertsons Companies, parent of Safeway, to dismiss a lawsuit Colorado Attorney General Phil Weiser filed challenging their combination.
Luxen’s ruling, made Wednesday, should clear the way for the state’s anti-trust case, which was filed in mid-February, to move forward.
Weiser, representing the state, alleges in his lawsuit that the proposed merger, which was announced in October 2022, would violate antitrust provisions in Colorado law that prohibit acquisitions that “may substantially lessen competition or tend to create a monopoly.”
Weiser, following a months-long investigation, argued that the $24.6 billion merger of the nation’s second- and third-largest grocery store chains would eliminate competition and harm shoppers, workers and suppliers in Colorado, where Kroger and Albertsons control the first- and second-largest grocery chains.
He also sought a penalty against the two companies for a “non-poaching” agreement they reached during a labor dispute and strike in 2022 stating that they would not hire each other’s employees or solicit each other’s customers.
Washington state Attorney General Bob Ferguson filed suit against the combination in January and the Federal Trade Commission challenged the merger in late February on grounds it would reduce competition for shoppers and reduce wages for grocery store workers.
Colorado sought a preliminary injunction to either stop the combination until its case was heard or a ruling that required the two companies to divest enough stores in Colorado to restore competition as existed before the proposed merger.
At the time of the complaint, Kroger had 148 stores under the King Soopers and City Market brands in Colorado and Albertsons operated 105 stores under the Albertson and Safeway brands.
On March 21, the two defendants filed a motion with the court to dismiss Weiser’s case. In April, they agreed to boost the number of overlapping stores to be sold to a third party, C&S Wholesale Grocer, to 579 from 413 initially proposed to win federal regulatory approvals.
Their lawyers argued in the motion that Weiser’s effort to stop the merger was “overbroad” in that it sought to address reduced competition in Colorado by stopping what was a combination involving operations in multiple states. The motion argued Colorado was seeking to unconstitutionally interfere in the trade relations of other states and was seeking to supersede federal authority.
One by one, Luxen struck down the arguments in his 26-page ruling and gave Kroger and Albertson 14 days to respond.
King Soopers did not respond to a request for comment on the ruling.