The proposed acquisition of US-based grocery company Albertsons by Kroger is facing a private antitrust action filed on behalf of 25 consumers in the US.
Reuters reported that the lawsuit was filed in the US District Court Northern District of California by consumers from California, Texas, Florida and other US states.
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The consumers are seeking a permanent injunction to prohibit the proposed mega-merger, which they say would violate Section Seven of the Clayton Antitrust Act and Section One of the Sherman Act.
In October last year, Kroger entered an agreement and plan of merger to acquire all Albertsons’ outstanding shares for around $24.6bn in cash.
Under the terms of the agreement, Albertsons will provide a ‘special dividend’ of $4bn.
Since its announcement, the planned merger has been opposed and questioned by various parties, including state attorneys-general, consumer groups and some US lawmakers.
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By GlobalDataIn a case document obtained by Reuters, the plaintiffs said that if the proposed acquisition takes effect, it would ‘increase prices for groceries, decrease the quality of food, eliminate jobs, close stores and offer less choice for consumers due to the overlap in geographic areas’.
They added that the deal would cause the closure of at least 650 Albertsons stores and ‘eliminate Albertsons as a significant competitor and prohibiting and/or disgorging the Special Dividend payment that gravely weakens Albertsons’ ability to compete’.
Kroger is the US’ largest supermarket operator by revenue and operates stores under the Harris Teeter, Pay Less and King Soopers banners.
Albertsons is the country’s second largest supermarket chain and operates under several banners, including Balducci’s, Shaw’s, Kings and Safeway.
With a total of nearly 5,000 grocery stores under their portfolio, the two retailers are major stakeholders in the US grocery market.
The merger is expected to close early next year and would create a unified entity with a current national market share of 36%.
