California Attorney General Rob Bonta and other state attorneys general Wednesday sent a letter demanding that Albertsons delay a $4 billion payout to stockholders until state and federal regulators complete their review of its proposed merger with Kroger.
Albertsons and Kroger employ more than 700,000 workers in communities across the country. State attorneys general say they want to ensure that the proposed merger of the two grocery giants does not result in higher prices for consumers, suppressed wages for workers or other anticompetitive effects.
With regulatory approval of the merger far from assured, this “special dividend” is premature and stands to dramatically hamper Albertsons’ ability to compete, Bonta said.
“Californians are feeling the high cost of inflation every time they pull out their wallet at the grocery store checkout,” Bonta said in a statement.
“With nearly 5,000 stores between them, Albertsons and Kroger are two of the largest grocery chains in the United States. Their proposed merger requires careful review — to ensure their customers and employees do not pay a price through higher grocery bills, food deserts, and lower wages.
“My colleagues and I demand that Albertsons delay its planned $4 billion payout to investors until review of the proposed merger is complete. I, frankly, have a hard time seeing how Albertsons would be able to continue to compete — as it is obliged to do during the pendency of merger review — after giving away a third of its market share.”
In the letter, the six attorneys general expressed strong concern with Albertsons and Kroger’s joint announcement that Albertsons will pay stockholders a cash dividend of up to $4 billion on Nov. 7. Federal and state antitrust laws forbid parties from entering in agreements that substantially lessen competition or unreasonably restrain trade.
Pre-merger notification requirements also prohibit “gun jumping” — the practice of improperly engaging in joint decision-making by parties pending merger review. The planned dividend payment would substantially impact Albertsons cash flow, making it difficult to continue to compete with Kroger ahead of the merger, according to the letter.
Grocery prices rose 12.2% from last summer to this summer, the biggest jump in over 40 years, according to Bonta.
— City News Service