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Shaw’s at Millcreek Plaza, last fall. Derek Davis/Staff Photographer
The future of 19 Shaw’s supermarkets in Maine is murkier after the Washington state attorney general filed a lawsuit this month to block the proposed $24.6 billion merger of Kroger and Albertsons, the nation’s largest grocery store operators.
Kroger’s takeover of Albertsons, which owns the Shaw’s chain, was set to happen as soon as Jan. 13, but now might happen as late as July, company officials predicted. And the impact of the lawsuit on the Federal Trade Commission’s ongoing review of the merger remains to be seen.
Attorney General Bob Ferguson said the merger would be bad for shoppers and workers in Washington, where Kroger and Albertsons have more than 300 stores and account for more than half of all grocery sales.
“Shoppers will have fewer choices and less competition, and, without a competitive marketplace, they will pay higher prices at the grocery store,” said Ferguson, who is running for governor.
Kroger Co. certified to the Federal Trade Commission in November that the merger would comply with antitrust rules meant to preserve competition.
However, the lawsuit filed Jan. 15 quotes an Albertsons executive’s internal message saying the merger would be “basically creating a monopoly in grocery… so [it] makes no sense,” and comparing it to “AT&T and Verizon wanting to merge.”
Kroger and Albertsons have updated their anticipated timeline for completing the merger, saying that it will occur in the first half of Kroger’s fiscal 2024, which starts in February.
“While this is longer than we originally thought, we knew it was a possibility and our merger agreement and divestiture plan accounted for such potential timing,” a joint statement said.
The companies were disappointed that Ferguson filed the lawsuit while the merger was still under regulatory review, a statement said.
“We remain in active and ongoing dialogue with the Federal Trade Commission and individual state attorneys general regarding our proposed merger and divestiture plan,” a statement said. “We believe our merger with Albertsons and the comprehensive divestiture to C&S will result in the best outcomes for customers, associates and our communities.”
In an effort to satisfy federal regulators, Kroger and Albertsons announced in September that they will sell 413 stores, eight distribution centers, two offices and other assets for about $1.9 billion to C&S Wholesale Grocers, which supplies more than 7,500 food sellers, including over 500 independent Piggly Wiggly grocery stores.
Cincinnati-based Kroger is the nation’s largest supermarket operator, with about 500,000 associates among 2,750 stores in 35 states, including the Ralphs, Dillons and Harris Teeter chains. Albertsons, headquartered in Boise, Idaho, is the second largest, with about 290,000 associates among 2,272 stores in 34 states, including the Star Market, Safeway and Vons chains.
The companies say the merger will provide “meaningful and measurable benefits” for workers and consumers, especially in light of growing competition from Amazon, Walmart and other online grocery purveyors.
Promised improvements include lower prices, more fresh food choices, long-term job security, higher wages, expanded benefits and a strong unionized workforce for associates. But industry watchdogs and others say it will be bad for employees and consumers as it threatens to further diminish a dwindling number of independent grocers and expand food insecurity in communities with struggling stores.
The merger comes as Maine’s supermarket landscape continues to diversify, with the opening last year of the state’s first Costco in Scarborough, and further growth and consolidation among Shaw’s, Hannaford, Market Basket, Target, Walmart and independent grocers across the state.
None of more than 5,500 supermarkets related to the merger is targeted for closure, but company executives aren’t saying exactly what the impact will be on the 127 Shaw’s stores across New England.
Founded in Portland in 1860, Shaw’s didn’t respond to a request for comment on the lawsuit. Neither Albertsons nor Kroger have answered specific questions about the potential impact on Shaw’s, other than to say they don’t expect the chain’s stores in Maine to change as a result of the merger.
Kroger and Albertsons announced their merger plan in October 2022, saying it’s necessary to stay competitive. Kroger bid $20 billion for Albertsons’ holdings and agreed to cover an additional $4.7 billion of Albertsons’ debt.
Several states have previously challenged the merger. Ferguson filed a lawsuit in November 2022 trying to stop Albertsons from paying a pre-merger $4 billion dividend to investors. The Washington State Supreme Court declined to take up that case.
The merger agreement set a closing date for Jan. 13, but the deal can be extended every 30 days into next October.
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