Arizona Attorney General Seeks $972K From Kroger Over Failed Albertsons Merger
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Arizona Attorney General Seeks $972K From Kroger Over Failed Albertsons Merger
Arizona Attorney General Kris Mayes wants more than $972,000 from two grocery giants whose 2024 merger she helped block.
Legal papers filed in federal court in Oregon say that's what the state spent on legal fees and costs fighting Kroger's, the parent company of Fry's Foods, Smith's, and other grocery stores, proposed bid to acquire the Albertsons chain, including Safeway, which Albertsons had previously acquired.
And it's not just Mayes seeking reimbursement. Several other states involved in the lawsuit, led by the Federal Trade Commission, also want some money. All totaled, their requests exceed $10.3 million.
But the attorneys for the affected states are telling U.S. District Court Judge Adrienne Nelson that the amount is justified, citing a Kroger filing with the Securities and Exchange Commission stating that it spent more than $1 billion over three years on the unsuccessful merger.
"Thus even when factoring in the FTC's role in the proceedings, the states' request in this case is reasonable," they wrote.
There was no immediate response from either company.
Mayes got involved in 2023 when the proposed merger was announced. In a statement, Kroger said it would benefit not just shareholders but would lower prices, provide more choices and establish a more competitive alternative to "large, non-union retailers," a reference to Walmart — though not all Kroger stores are unionized, either. It also promised to invest $1.3 billion into Albertsons.
That led Mayes, along with other attorneys general, to start her own probe.
All that, according to the lawsuit, cost money. The states shared a database to handle the more than 19 million documents gathered.
"States also issued their own investigative demands, interviewed witnesses in the industry, attended FTC investigative hearings, spoke to consumers and grocers, and conducted market research, the lawyers told Nelson.
Then in 2024, the FTC sued, and with Arizona and other states joining in, even more costs were incurred. Ultimately, federal and state judges issued an order enjoining the $24.6 billion merger. The chains ultimately gave up and remained separate.
But none of that, the state attorneys general say, excuses the two chains from reimbursing them for all their legal fees and costs investigating, separate from the FTC, whether state laws could be violated by the merger.
"Each of the states spent a significant amount of time investigating and prosecuting their opposition to the proposed merger," they told the judge. "The hours for both investigating and prosecuting the states' antitrust claims for injunctive relief are recoverable."
Mayes herself said at the time that her office was reviewing questions such as whether the combination would enable the surviving entity to drive up prices in Arizona, whether stores would close, and how it would affect the 35,000 Arizonans working for both.
That also included a series of town halls across the state to hear from residents on how the merger would affect them and their community.
The attorneys pursuing the legal fees estimated in the court documents that the eight states and the District of Columbia — separate from the FTC — spent a total of about 15,000 hours involving 45 attorneys, 16 paralegals and other support staff.
And they said the $774 an hour they want for lawyers is reasonable.
"The proposed merger between Albertsons and Kroger represented a significant threat to the competitive market for grocery stores that is fundamental to maintaining lower costs for food," the lawyers for the state told the judge. "Defendants were willing to spend $1.5 billion to see the merger through," they said. "The states' request for attorneys' fees and expenses is reasonable in light of the complexity of the issues, the significant impact they had, and the resources required to succeed."
The bid for legal fees is separate from the state of Washington, which filed its own legal action in state court to block the merger, and was separately awarded $28.4 million.
Sources