Kroger has expressed strong objection to the Washington attorney general’s demand for the company to reimburse the state for over $32 million in legal costs that arose from attempts to block Kroger’s failed merger with Albertsons.
In documents submitted to the Kings County Superior Court, Kroger argues that the request is unjustified since Washington’s litigation duplicated similar federal lawsuits aimed at stopping the merger.
The state had successfully won its case against the proposed $24.6 billion merger last year, coinciding with a ruling by a U.S. District Court in Oregon that also favored the Federal Trade Commission’s efforts to block the transaction.
Kroger’s filing highlights a notable precedent, asserting that prior to this case, no state attorney general had undertaken legal action to enjoin a merger concurrently with federal enforcement actions.
Both Washington and Colorado diverged from a coalition of nine other attorneys general who had coordinated their legal efforts with the FTC to challenge the merger based on antitrust concerns.
Originally announced in 2022, the merger plans included Kroger’s acknowledgment that divesting several stores would be necessary to address antitrust issues.
In response to regulatory concerns, Kroger and Albertsons had arranged for C&S Wholesale Grocers to take over 579 stores and other assets, but these plans were deemed insufficient by regulating authorities.
With the merger agreement canceled last year, Albertsons has since filed a lawsuit against Kroger regarding the merger’s management.
Kroger, in turn, has lodged counterclaims against Albertsons, and there’s also been legal action initiated by C&S against Kroger.
The reimbursement request made by Washington is reportedly the largest in the state’s history, amounting to six times the legal fees sought in the concurrent federal case.
In its objection, Kroger contends that Washington engaged an external California law firm, Munger, Tolles & Olsen LLP, to handle its case instead of utilizing the state’s in-house antitrust division.
The attorney general’s office reportedly paid this firm nearly $10 million for their services, according to Kroger’s filing.
Additionally, Kroger accuses Washington’s Attorney General of inflating costs, citing a particular instance where costs associated with the state’s in-house staff involved in the case were allegedly doubled.
In response, a spokesperson from the Washington State Attorney General’s office asserted that they “strongly disagree” with Kroger’s claims and indicated plans to file a reply brief.
Former Washington Attorney General Bob Ferguson initiated the lawsuit against the merger in January of last year, citing concerns that the merger of the two largest supermarket chains in Washington would drastically reduce shopping choices for consumers and suppress competition.
The legal action pointed out that even with the anticipated divestment of over 100 stores in the state, Kroger would still maintain a “near-monopoly” in many markets.
Moreover, Ferguson noted that plans to sell the stores to a primarily wholesale supplier could jeopardize the future of many of the divested supermarkets, threatening jobs in Washington and further curtailing options for local shoppers.
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