Colorado Attorney General Phil Weiser said Wednesday that he is filing a lawsuit seeking to block the $24.6 billion merger of Kroger and Albertsons, the state’s largest grocery store chains, because he believes it would eliminate competition and harm shoppers, workers and suppliers.

Weiser joins Bob Ferguson, attorney general for Washington state, who filed a lawsuit in January that said the consolidation of the two large supermarkets would severely limit options for shoppers and eliminate competition that helps keep prices in check.

The Federal Trade Commission is reviewing the proposed merger, first announced in October 2022, to determine whether combining Kroger, the country’s second-largest supermarket chain, with Albertsons, the third-largest chain, would violate antitrust laws.

In a news conference announcing Colorado’s lawsuit, Weiser said he heard concerns from people in town halls held across Colorado last year. They worry about job losses, higher costs and lack of access for local farmers and ranchers to sell their products if the merger goes through.

“These fears are warranted because the market for grocery stores in Colorado is already very concentrated, with too little competition,” Weiser said. “This merger would make the problem worse, with Kroger controlling roughly half of all the supermarkets in Colorado.”

After the merger, Kroger could raise prices, “pinching consumers during a time when consumers are already concerned about the high cost they pay the grocery store,” he added.

Kroger owns 148 stores in Colorado, which operate under the King Soopers and City Market banners. Albertsons operates 105 Safeway and Albertsons stores in the state.

Weiser’s office filed for a preliminary injunction, asking the Denver District Court to prevent Kroger and Albertsons from completing their merger before the lawsuit seeking to block the merger on antitrust grounds is heard.

The attorney general’s office is also suing the supermarket chains over a “no-poach” agreement. Weiser said while reviewing documents in the case, his staff found an email by executives showing that Albertsons agreed not to hire any King Soopers employees during a 2022 strike against King Soopers.

Albertsons also agreed not to solicit any King Soopers pharmacy customers during the strike by union members, Weiser added. He said the agreements violate the state’s antitrust laws.

The complaint about the agreements is independent of the merger, Weiser said. “But the fact that the company entered into such agreements and thought they could get away with it, underscores why competition matters, to consumers, to workers, to farmers and to our communities.”

Weiser said his office is seeking $1 million in civil penalties from Kroger and Albertsons each for entering into the agreement.

Kroger and Albertsons executives have said the merger will allow them to strengthen their stores, invest in employees and lower prices and compete against national, nonunion discount grocers such as Walmart and Costco. Kroger has said the merger would mean gains of $1 billion in higher wages, expanded benefits, long-term job security and a strong unionized workforce.

“We are disappointed in Attorney General Weiser’s premature decision to file a lawsuit while the merger is still under regulatory review, and we remain in active dialogue with the FTC and the other state attorneys general,” Kroger said in a statement.

The two companies “will vigorously defend this in court because we care deeply about our customers and the communities we serve,” Kroger said. The Cincinnati-based company also denied there were any “non-solicitation or so-called no-poach agreements” between Kroger and Albertsons.

United Food and Commercial Workers Local 7, which represents workers at the two chains in Colorado and Wyoming, and other union chapters across the country oppose the merger. Kim Cordova, president of UFCW Local 7, said the union applauds Weiser’s decision to sue to prevent the merger and hopes other state attorneys general do, too.

“We think this is absolutely the right decision for him to make and we think he’s standing up for all Coloradans and, frankly, for everybody in this country. This merger is a really big deal,” Cordova. “We also hope that the FTC hurries up and makes a decision to block (the merger) as well.”

The union wasn’t aware of the no-poaching agreement that Weiser said was struck during the January 2022 strike, Cordova said.

“If we would have known that they entered into this agreement, we obviously would have taken legal action against it,” Cordova said.

Weiser held 19 listening sessions on the merger across the state in 2023 and received more than 6,000 responses to an online survey as he considered the potential impacts on Colorado shoppers, grocery employees and communities.

Weiser was also critical of a divestiture plan by Kroger and Albertsons that is aimed at alleviating the impacts of consolidation in the market. The companies have proposed selling some of their stores nationwide to C&S Wholesale Grocers for $1.9 billion to spur competition.

Union officials have said 52 of the stores to be sold to C&S are in Colorado. Union members fear a repeat of Albertsons’ acquisition of Safeway stores in 2015, when Haggen, a small supermarket chain based in Washington state, bought some of the stores. In less than a year, Haggen filed for bankruptcy.

Cordova said as a result, roughly 40 stores closed permanently in Colorado and Wyoming.

Kroger said Wednesday that C&S is led by an experienced management team with an extensive background in food and retail distribution. The wholesale grocery supplier serves more than 7,500 independent supermarkets, retail chain stores and military bases and was a buyer in a previous merger, Kroger said.

Updated at 3:30 p.m. Feb. 14 to add comments from attorney general, union and companies.

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