California Attorney General Rob Bonta and other state attorneys general sent a letter Wednesday demanding that Albertsons delay paying out $4 billion to shareholders until state and federal regulators complete their review of his 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 make sure the proposed merger of the two grocery giants doesn’t result in higher prices for consumers, lower wages for workers or other anti-competitive effects.
With regulatory approval for the merger far from assured, this “special dividend” is premature and risks significantly hampering Albertsons’ ability to compete, Bonta said.
“California feel the high cost of inflation every time they pull out their wallets at the grocery 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 consideration – to ensure that their customers and employees don’t pay a price through higher grocery bills, food deserts and lower wages.
“My colleagues and I are demanding that Albertsons defer its planned $4 billion payout to investors until the review of the proposed merger is complete. Frankly, I find it hard to see how Albertsons could continue to be competitive – as it is forced to do during merger review – after ceding a third of its market share.
In the letter, the six attorneys general expressed serious concern over the joint announcement by Albertsons and Kroger that Albertsons will pay shareholders a cash dividend of up to $4 billion on November 7. Federal and state antitrust laws prohibit parties from entering into agreements that materially lessen competition. or unreasonably restrict trade.
The pre-merger notification requirements also prohibit “gun jumping” – the practice of improperly engaging in joint decision-making by the parties pending merger review. The planned dividend payment would have a substantial impact on Albertsons’ cash flow, making it difficult to continue to compete with Kroger before the merger, according to the letter.
Grocery prices rose 12.2% from last summer to this summer, the biggest jump in more than 40 years, according to Bonta.
— City News Service