WASHINGTON, D.C. – Attorney General Karl A. Racine today led a bipartisan group of state Attorneys General in calling on grocery chain Albertsons – which owns Safeway – to hold off on paying out nearly $4 billion to its shareholders until the state Attorneys General can complete their review of Kroger and Albertson’s proposed merger.
AG Racine also announced that the Office of the Attorney General (OAG) is starting a formal investigation into the Albertsons-Kroger proposed merger and its impact on workers and consumers. The investigation will also evaluate whether the “special dividend” affects Albertsons’ ability to compete while the merger is reviewed.
“Healthy and strong competition is an American value that Republicans and Democrats can unite around,” said AG Racine. “Anticompetitive mergers have real impacts on everyday people. We’re deeply concerned about the level of concentration in essential industries, such as grocery stores. And we’re asking Albertsons to not proceed with the payout while we thoroughly assess whether this merger is anti-competitive, anti-consumer, or anti-worker. While we trust that Albertsons will adhere to our request, we are actively exploring other options to achieve our objectives, including litigation.”
On October 14, when Albertsons and Kroger announced their proposed merger, Albertsons also announced a “special dividend” to go out to shareholders on November 7 at $6.85 per share – totaling nearly $4 billion, which is more than two years of profits for the company. The “special dividend” risks significantly limiting Albertsons’ ability to operate and properly compete with Kroger, which could seriously impact consumers, workers, and the grocery industry writ-large before regulators even have the chance to review the deal.
With inflation at historically high levels, consumers’ grocery prices rose 12.2% from last summer to this summer, which is the biggest jump in over 40 years. AG Racine is looking into whether additional consolidation in the grocery industry could lead to even higher food prices at a time when many families across the country are struggling to afford to put food on the table. He is also examining if the special dividend or the merger could reduce good, high-paying jobs, and hurt wages and benefits for workers. Meanwhile, the private equity investors who control the grocery chains will have gained profits nine times larger than their original investments in 2006, if the merger is approved.
Kroger and Albertsons have more than 710,000 employees in nearly 5,000 stores across 48 states and D.C., reinforcing that all corners of the country would feel the effects of the proposed merger.
AG Racine led the bipartisan letter to Albertsons and Kroger and was joined by the Attorneys General of Arizona, California, Idaho, Illinois, and Washington.
A copy of the coalition’s letter to Albertsons and Kroger is available here.