Seeks to block $4 billion "special dividend" for Albertsons shareholders while review of its proposed merger with Kroger is ongoing
OAKLAND – California Attorney General Rob Bonta today, along with the attorneys general of the District of Columbia and Illinois, filed a motion for a preliminary injunction to block Albertsons' planned $4 billion payment of a "special dividend" to shareholders. Earlier this month, the attorneys general filed a lawsuit against Albertsons amid concerns that the payment would dramatically hamper the company's ability to compete with Kroger while regulatory review of the proposed merger between the companies is ongoing. Albertsons and Kroger collectively own nearly 800 stores in California, serving households in every corner of the state and providing jobs to nearly 48,000 California workers. Attorney General Bonta is committed to ensuring that the proposed merger, and the special dividend, does not result in higher prices for consumers, suppressed wages for workers, or other anticompetitive effects.
“Whether you’re buying a concert ticket or going to the grocery store, when one company is allowed to monopolize a market, it’s hardworking Californians who pay the price,” said Attorney General Bonta. “Right now, Albertsons seems more concerned with prematurely putting cash back into the hands of its shareholders than protecting consumers’ access to fresh and affordable food, and frankly, I find that more than a little alarming. We’re going back to court to stop this $4 billion handout, and we're not going to stop fighting to make sure that the proposed merger doesn't harm California families, workers, and farmers.”
Supermarkets are already a consolidated industry in the United States, and Albertsons and Kroger are two of its largest players. Kroger owns and operates over 2,700 grocery stores under different brand names across the United States, including approximately 214 Ralphs and 19 Foods 4 Less stores in California alone. Albertsons operates another 1,800 grocery stores, including approximately 125 Albertsons, 185 Vons, 243 Safeway, and 26 Pavilion stores in just California.
If allowed to proceed, Albertsons’ special dividend would significantly reduce Albertsons’ ability to compete while regulatory review of the merger is ongoing and, should a regulatory challenge to the merger succeed or should the parties abandon the transaction, possibly beyond. This decrease in competition will likely result in California residents paying more for their groceries and worse service than they would have if Albertsons abandoned its special dividend. Albertsons’ inability to invest in its stores and its workforce is also likely to harm California workers, who will experience lower wage growth and worse working conditions than they would have otherwise.
In today's motion, the attorneys general ask the court to prohibit Albertsons from moving forward with the special dividend while regulatory review of the proposed merger is ongoing, arguing that state and federal antitrust law forbids parties from entering into agreements that substantially lessen competition or unreasonably restrain trade.
A copy of the motion is available here.