Reuters reports that "25 consumers in states including California, Texas and Florida" have filed a private lawsuit in California that "seeks to stop Kroger Co's planned $25 billion purchase of rival Albertsons Companies Inc, a deal that state attorneys general, consumer groups and some U.S. lawmakers have questioned as harmful to competition in the grocery market."
The suit charges that the merger "will be used to increase prices for groceries, decrease the quality of food, eliminate jobs, close stores and offer less choice for consumers … The lawsuit also said it seeks to force the disgorgement of a $4 billion dividend that Albertsons paid to shareholders after defeating a Washington state attorney general action challenging the payout. Plaintiffs claim the dividend 'gravely weakens Albertsons' ability to compete'."
Reuters writes that "the lawsuit appears to be the first private action challenging the deal," which the companies have both defended as being necessary to allow them to compete against the likes of Walmart and Amazon.
Neither Kroger nor Albertsons reportedly have commented on the suit.
- KC's View:
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Just the beginning, I suspect. I don't know if a variety of lawsuits objecting to the merger from both private citizens and stakeholder organizations with skin in the game creates greater pressure on the Federal Trade Commission (FTC) to try to stop the deal - after all, political pressure only goes so far, and regulators have to stay within their reading of the law.
But the betting odds on government intervention have to be improving.
