Kroger Responds to Lawsuits to Stop the Merger with Proposal to Sell More Stores

Makes a Bad Idea Worse

On April 22, 2024, Kroger, as part of their proposed mega-merger with Albertsons, announced a newly revised divestiture plan with C&S Wholesale – the company that would buy divested stores if the merger were approved. This proposed increase in store sales was considered by many as a response to concerns by regulators and their lawsuits filed in January and February to stop the proposed merger.

This updated divestiture plan included over 150 more stores from the original list of over 400 nationwide. While the most significant problems with the proposed merger and the originally proposed divestment plan remain, in many respects things only got worse under this expanded new plan. Below is the statement our coalition of locals (UFCW 5, 7, 324, 400, 770, 1564 and 3000) issued immediately to members and the press on April 22nd:

“This bigger proposed divestiture simply increases the challenge C&S, a New Hampshire-based wholesaler, would have trying to operate a hodgepodge chain of retail stores. They have no experience operating retail stores in these states, would still lack the IT, customer loyalty and manufacturing capabilities needed, and would most likely end up monetizing the real estate under many of these stores.”

The biggest steps so far to successfully oppose the proposed mega-grocery took place in February 2024 when the Federal Trade Commission, joined by eight states and the District of Columbia, filed a lawsuit to stop the merger. Earlier, on January 15, the Washington State Attorney General filed a lawsuit to stop the merger and then on February 16 the Colorado Attorney General filed suit. These different legal challenges are moving along independently and will begin their days in court starting later in the summer (more details below*). These cases are a result of a tremendous amount of work by the regulators, our partners and our local unions and our members who have organized a massive national opposition to the proposed merger since the first day it was announced in October of 2022.

In addition to the general lack of experience of C&S to operate retail grocery stores in any of our states, they have essentially zero experience operating retail pharmacies. C&S currently operates just one pharmacy (in upstate New York) and has no capacity to operate a chain of hundreds of retail pharmacies (that would ostensibly come along with the purchase of over 550 stores in the modified and expanded divestiture plan). This capacity would require the skills and experience to negotiate with the huge pharmacy benefit managers, oversee a workforce of pharmacy professionals, and manage compliance with applicable laws in many diverse states. Even if C&S were to acquire the stores and operate them, the predictable result in the case of the pharmacies on those stores would be that C&S is unable to successfully operate them and would result in closing the pharmacies thus making more pharmacy deserts and reducing access to critical prescriptions for millions of community members.

The effort to oppose the merger is not over yet.

Kroger and Albertsons have both said they will challenge the lawsuits in court, so we expect it could be many months until a final outcome is known. Instead of spending all this time and money on a proposed merger that would lead to higher prices, closed stores, lost jobs, a reduced ability for union workers to negotiate strong contracts, and giving away billions to wealthy investors, these companies should be doing the necessary work to provide better wages and working conditions and making stores safer.

Timeline for legal cases:

1. August 12, 2024 – Colorado State Attorney General lawsuit to be heard in court.
2. August 26, 2024 – Federal Trade Commission (FTC) injunction case starts in U.S. District Court in Oregon.
3. September 16, 2024 – Washington State Attorney General lawsuit to be heard in court.

We will reach out to members with additional updated information as it becomes available. Also, we will plan to hold meetings to educate members on important updates and opportunities for action as we approach these court dates later in the summer.