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Illinois AG Albertsons Lawsuit
Illinois AG Albertsons Lawsuit
DISTRICT OF COLUMBIA,
400 Sixth Street N.W.
Washington, D.C. 20001,
STATE OF CALIFORNIA
300 S Spring Street, Suite 1702
Los Angeles, CA 90013, and
Case No. 1:22-cv-3357
STATE OF ILLINOIS,
100 W. Randolph St.
Chicago, IL 60601,
Plaintiffs,
v.
and
Defendants.
Plaintiffs, the District of Columbia (the “District”), the State of California, the State of
Illinois, and through their respective Attorneys General (collectively, “the States” or “Plaintiffs”),
bring this civil enforcement action against Defendants The Kroger Co. (“Kroger”) and Albertsons
Companies, Inc. (“Albertsons”), pursuant to their federal and statutory authority, seeking equitable
Case 1:22-cv-03357 Document 1 Filed 11/02/22 Page 2 of 27
and injunctive relief to enjoin Kroger and Albertsons from acting in concert with each other or
with any other party in restraint of trade. This includes reducing Albertsons’ ability and incentive
to compete through an agreement to use a so-called “Special Dividend,” which together with other
merger agreement provisions will strip Albertsons of its capacity to compete pending regulatory
INTRODUCTION
Albertsons is one of the largest supermarket chains in the country, and competes in the
District, California, and Illinois under multiple banners, most notably Safeway in the District, with
more stores there than any other supermarket chain. On October 14, 2022, Albertsons and Kroger
announced they were merging, with Kroger set to pay some $25 billion to buy Albertsons. This
merger was already destined to draw regulatory scrutiny for possible antitrust violations given the
size of the deal and the players—indeed, their merger agreement recognizes as much, and even
provides for the creation of a holding company for the hundreds of stores the parties expect to have
to divest to gain regulatory approval. But that is hardly unusual for such a “megamerger.” These
large transactions in America’s increasingly concentrated economy are understood to require time
What is unusual is the way Defendants structured their transaction, because by the time the
merger review ends—by Defendants’ projections, they will not close until 2024—one of them may
barely be left standing. On November 7, 2022, Defendants have arranged for Albertsons to pay $4
billion, roughly all the cash it has available to compete today, to stockholders, $1.5 billion of it
from a loan it will take out. The merger agreement, now inked, limits Albertsons’ ability to seek
additional financing, and Albertsons’ low bond ratings indicate that even if it could go out and try
to raise capital, the national economic downturn will make doing so especially difficult.
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Discovery may reveal that the “Special Dividend” reflects a calculated effort to leave
Albertsons just battered enough for Defendants to argue later (to regulators or a court) that it is a
“flailing” or “failing” firm that Kroger should be allowed to acquire lest it go out of business
anyway, but still worth its hard assets and Kroger’s gain from neutralizing a competitor. But
whatever the motivation, the antitrust laws do not care: Defendants have an agreement that, as
detailed herein, will have an anticompetitive effect on competition among supermarkets in the
District of Columbia, California, and Illinois, and that is sufficient basis for this Court to stop the
Special Dividend from being paid, and protect consumers and workers in all the States.
PARTIES
the local government for the territory constituting the permanent seat of the government of the
United States. The District is represented by and through its chief legal officer, the Attorney
General for the District of Columbia. The Attorney General has general charge and conduct of all
legal business of the District and all suits initiated by and against the District, and is responsible
2. Plaintiff State of California is a sovereign state. Rob Bonta is the Attorney General of the
State of California, the chief legal officer for the state, and brings this action on behalf of the people
of the State of California to protect the State and its residents from Defendants’ anticompetitive
3. Plaintiff State of Illinois is a sovereign state. Kwame Raoul is the Attorney General of the
State of Illinois, the chief legal officer for the state, and brings this action on behalf of the people
of the State of Illinois to protect the State and its residents from Defendants’ anticompetitive
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4. Defendant Kroger is a publicly traded for-profit corporation, incorporated under the laws
of Delaware, and headquartered in Cincinnati, Ohio. Kroger owns and operates over 2,700 grocery
stores under different brand names across the United States, as well as over 2,200 pharmacies and
1,600 fuel centers. Among the brands Kroger operates are Kroger, King Soopers, and, in the
laws of Delaware, and headquartered in Boise, Idaho. Albertsons operates over 1,800 grocery
stores under different brand names across the United States, as well as over 1,700 pharmacies, and
over 400 fuel centers. Among the brands Albertsons operates in the District, California, and Illinois
JURISDICTION
6. This Court has subject matter jurisdiction over this case pursuant to 15 U.S.C. §§ 4 and 26
7. This Court has personal jurisdiction over Kroger, and venue is proper in this Court under
15 U.S.C. § 22 and 28 U.S.C. §1391 because Kroger transacts business and is found within this
District.
8. This Court has personal jurisdiction over Albertsons, and venue is proper in this Court
under 15 U.S.C. § 22 and 28 U.S.C. §1391 because Albertsons transacts business and is found
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FACTUAL ALLEGATIONS
Teeter and Others in the District, and Against Kroger Under Various Banners in
9. Competition in groceries is unlike competition in most other goods and services. Food is
one of humanity’s few true necessities. Supermarkets give local residents access to fresh fruits and
vegetables, and other grocery products, often competing against each other to provide the best
value and service, and offering good, often union, jobs to workers.
10. Researchers have written extensively about the problem of “food deserts”—areas that by
being more than a mere half mile from a grocery store or supermarket, together with low rates of
car access and high poverty rates, merit policymakers’ special attention because of their dire
11. Accessibility of supermarkets on foot or by public transit for many of our neighborhoods
and consumers is critical for the District’s communities’ health as a whole, as well as those of
California and Illinois. Access to adequate high-quality food and grocery stores is already an issue
for some communities in California. For example, South Los Angeles is a food desert that has
very limited access to fresh food and grocery stores. Some communities in Illinois, especially on
the City of Chicago’s east and south sides, are also food deserts, which severely lack access to
fresh groceries.
12. The importance of the products supermarkets sell and the service and innovation they
provide to District, California, and Illinois residents mean that any material reduction in a
supermarket competitor’s ability to compete can harm those residents in ways that are far from
hypothetical. Prices can go up, and promotions can decrease, and that translates directly into the
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quantity and quality of food families can put on their tables. Staffing can also decrease, leading to
worse service for consumers and worse conditions for District, California, and Illinois workers.
13. Albertsons, under the Safeway banner, has more locations than any other grocery store in
14. Safeway competes with other supermarkets for consumers’ dollars. For example, when
Harris Teeter had a supermarket on Potomac Avenue in Southeast DC, in August 2020 Safeway
renovated and expanded its Safeway supermarket on 14th Street Southeast less than half a mile
15. Defendants also compete in Northwest DC’s Adams Morgan neighborhood, where Harris
Teeter operates a supermarket on Kalorama Road, a mere third of a mile from the Columbia Road
Safeway.
16. District residents rely on Safeway for fresh food at affordable prices to feed themselves
17. Each of Safeway’s thirteen locations in the District runs weekly circular ads, among other
II. Albertsons Currently Has Significant Liquidity, Which Is Critical Given Current
18. Capital is the lifeblood of business operations. Businesses need access to capital to compete
19. Capital markets are generally efficient, meaning the market is informed about which
investments are likely to bring in a favorable return, and those investments will generally be able
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to attract the capital they need. Certain companies may face different limitations on their access to
20. During economic downturn, economic research shows, companies with lower bond ratings
are likely to have greater difficulty accessing capital affordably, if they can at all.
21. The United States has entered a period of economic downturn. Economists generally define
a recession as “a significant decline in economic activity that is spread across the economy and
that lasts more than a few months.” Many economists, economic forecasters, and investors expect
the United States economy to enter a recession in the coming months, other believe we are already
in one.
22. Companies with lower than investment-grade bond ratings by large rating agencies like
Moody’ and Standard & Poor’s tend to elect to have more cash on hand to ensure adequate liquidity
and their ability to meet needs for capital, knowing they will have a harder time accessing capital
23. Albertsons’ Moody’s rating is Ba2, and its S&P rating is BB, which is in both cases below
investment grade.
24. Albertsons currently has a market capitalization of approximately $11 billion, and reported
$3.392 billion in cash, based on its most recent U.S. Securities and Exchange Commission (“SEC”)
10-Q filing, as well as $652 million in net receivables. Net receivables are defined as money
Albertsons is owed less whatever it expects it is owed but will never be paid.
25. Albertsons’ 2022 SEC filings indicate its liquidity needs annually are approximately $6
billion.
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26. On October 13, 2022, Albertsons and Kroger (collectively, “Defendants”), who are the two
largest competitors in the sale of groceries nationally, and the first and third largest (respectively)
in the District of Columbia, entered into an “Agreement and Plan of Merger By and Among
Albertson Companies, Inc., The Kroger Co., And Kettle Merger Sub, Inc.” (“Merger Agreement”).
27. This Merger Agreement is the final and complete agreement between Defendants to
consummate a merger that they had contemplated and negotiated since at least June of 2022.
Dividend” (the “Special Dividend”), which the Merger Agreement defines as “one or more special
cash dividends payable to holders of [Albertsons] Common Stock, [Albertsons] Preferred Stock
and, by way of dividend equivalent rights, [Albertsons] Equity Awards, as applicable, in an amount
not to exceed with respect to all such special cash dividends $4,000,000,000 in the aggregate.”
29. As of October 28, 2022, nearly 30% of all Albertsons shares were held by Cerberus Capital
Management, L.P., a private equity firm that is the largest holder of Albertsons stock and maintains
30. In press releases, and in company 8-Ks filed with the U.S. Securities and Exchange
Commission announcing the Merger Agreement, Defendants announced the Special Dividend, and
stated that it would be paid on November 7, 2022, to record holders of Albertsons stock as of
31. Thus, Albertsons intends to pay the Special Dividend before regulatory review of
32. The Special Dividend is the result of an agreement between Albertsons and Kroger. It was
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33.
34.
IV. Payment of the Dividend Would Upset the Status Quo and Infect Review of a
35. This Special Dividend is over 57 times the size of Albertsons’ usual dividends. A giveaway
like this could raise concerns in numerous situations, but especially for a merger of this size in an
36. Supermarkets are already a consolidated industry in the United States. Albertsons and
Kroger are two of its largest players and historically fierce competitors in the District, California,
Illinois, and numerous States. As described above, Kroger and Albertsons have competed against
each other. In the Northeast, the proposed merger halts Defendants’ advances on each other’s
territory at roughly where the four quadrants of the District of Columbia meet.
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37. Defendants claim their transaction unites “complementary” companies, but even their own
map of store locations makes clear their competitive overlap in properly defined relevant antitrust
Source: krogeralbertsons.com
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38. Defendants recognize that their transaction will require extensive antitrust review by
regulators and have provided for divestiture of hundreds of stores in their Merger Agreement, via
39. The nationwide implications of the transaction deserve the fulsome analysis the Special
Dividend threatens to upend. In the District, California, and Illinois, because of the essential and
constant need for food, even a short-term reduction in competition in the urban neighborhoods,
especially those where Kroger and Albertsons compete—at Harris Teeter and Safeway in the
District, for example—can result in higher prices and reductions in quality that can significantly
40. The Federal Trade Commission and the U.S. Department of Justice often use market
concentration (determined by market share) as a guide for determining whether a firm will have
market power and thus have the ability and economic incentive to substantially reduce competition
41. While the immediacy with which Albertsons intends to pay the Special Dividend makes a
complete analysis of current market shares impossible at the filing of this Complaint, based on
publicly available data from 2021 on supermarkets competing in the District, the District
preliminarily estimates that Albertsons had an 19.4% share and Kroger a 13.9% share within the
District of Columbia:
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42. The proposed transaction would leave two large entities—Kroger and Giant—controlling
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43. These shares are District-wide, and the local nature of supermarket competition means that
Defendants’ market shares and overall market concentration are likely substantially higher in areas
44. To determine a merger’s effect on market concentration, the federal agencies usually use
the Herfindahl-Hirschman Index (HHI), which is calculated by summing the squares of the
45. The Horizontal Merger Guidelines, published by the two agencies and regularly cited by
courts reviewing merger challenges, consider a post-merger HHI of over 2500, with a merger-
related increase in HHI of more than 100 points, to presumptively create or enhance market power,
demanding close scrutiny. See United States v. Phila. Nat’l Bank, 374 U.S. 321 (1963).
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46. The 2021 data available to the District indicate that this proposed Merger would lead to a
post-merger HHI of 2524, an increase of 541 from the pre-merger HHI of 1983, in the District of
Columbia.
47. Not all supermarkets are adequate substitutes in the eyes of all consumers, however. For
example, Wegmans may have a significant market share if one looks at District-wide shares
(which, as detailed herein, likely understate concentration in smaller relevant geographic markets),
but there is only one Wegmans in the District, and it is in American University Park, a
neighborhood without meaningful Metro access. Thus, Wegmans will not meaningfully discipline
a post-merger price increase by Kroger in the Adams Morgan Harris Teeter or the Adams Morgan
Safeway, assuming it even keeps both open. Similarly, Albertsons’ pre-merger share District-wide
likely understates its market power now because many District residents have fewer meaningful
substitutes to which they could turn today or while the merger is reviewed.
48. Additionally, District residents depend on employment by these companies. The reduced
need for employees and suppressed wages from reduced competition for labor by these employers
following a merger would also constitute a significant competitive harm. The speed at which
Albertsons has decided to complete payment of this Special Dividend has rendered impossible any
meaningful review, but organizations knowledgeable about labor conditions, including the UFCW
Local 400 (which represents Safeway workers in the District), have raised substantial concerns
that this dividend will make it more difficult for Albertsons to compete for labor, by reducing
49. Albertsons’ current contribution to the prevailing competitive dynamic among District
supermarkets is, as shown by its market presence, and the jobs it provides, critical. That, together
with the fact that the proposed merger increases market concentration to presumptively
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anticompetitive levels under at least one defined relevant antitrust market, demonstrates that this
50. These facts also highlight the risk of anticompetitive effects should Albertsons’
competitiveness be compromised in any way during the merger’s review, regardless of whether
the merger (a) closes, or (b) does not close, but the Special Dividend leaves Albertsons a distinct
51. Furthermore, Defendants currently operate competing banners with strong presences in
numerous other States. In Illinois, for example, publicly available information indicates the
Defendants’ combined share of supermarket sales totaled about 64% in September 2022.
52. September data tracking visit share of Illinois grocery list Albertsons’ banner, Jewel-Osco,
53. In California, Kroger owns and operates approximately 214 stores under the Ralphs banner
and an additional 19 under Food 4 Less. A majority of these stores are located in Southern
California. The Albertsons Company operates approximately 579 grocery stores in California: 125
stores under the Albertsons banner, along with 26 Pavilion, 243 Safeway, and 185 Vons stores.
54. The Special Dividend payment also affects employees in California. Kroger has
55. The Special Dividend risks seriously hindering Albertsons’ ability to compete with Kroger
and other supermarkets in these and other States during the merger review and interfering with the
merger review process. Thus, the Court should enjoin the payment of the dividend until the
District, California, Illinois, and others can complete their full review of the merger and determine
whether combining Kroger and Albertsons would violate the antitrust laws.
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56. The agreement between horizontal competitors Kroger and Albertsons for the latter to pay
the Special Dividend will weaken one of the top supermarket competitors in each of the Plaintiff
States by removing substantially all of the cash it needs to operate competitively, and saddling it
with $1.5 billion in new debt just to pay off Albertsons’ stockholders. The agreement’s likely effect
will be to restrict Albertsons’ ability to compete on pricing and service, by severely limiting its
liquid assets and depriving it of the cash needed for competition, at a time when it will face unusual
Martin and Aerojet Rocketdyne. There, Lockheed agreed to pay $5 billion, at $56 per share.
Aerojet announced with the merger a $5 per share special dividend that would discount the cash
price Lockheed would make, and would occur three months from the date of announcement
(providing much more time than the 3 weeks here). In 2022, more than a year after the merger was
announced, the FTC moved to block that merger, and Lockheed announced the termination of the
merger. Aerojet’s share price has yet to recover to the price it traded at when the merger was
announced, its private equity shareholders’ struggle to recoup costs left Aerojet less competitive
after the merger was called off, and today it seeks a new acquirer.
58. As the above example demonstrates, in the rare instances where this dividend structure is
59. Albertsons plans to fund the agreed-upon Special Dividend by using $2.5 billion in cash
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60. This payment would eliminate more than half of Albertsons’ cash and cash equivalents.
Both in ordinary course documents and in its most recent 10-Q filing, Albertsons claims $3.392
billion in cash and cash equivalents the Special Dividend would reduce that available liquidity to
only $0.892 billion. It would increase Albertson’s net debt from $4.54 billion to $8.54 billion.
61. A lack of cash will hamper Albertsons’ ability to compete in the short term. Albertsons
will be unable to respond effectively to shifts in the market through promotions and advertising
more generally, have less available cash to pay employee wages and benefits to retain staffing, and
be unable to make necessary investments into their stores, or heavily disincentivized from doing
so.
62.
63. Even without taking on new debt for necessary repairs, incurring $1.5 billion in new debt
to pay the Special Dividend will nearly double Albertsons’ leverage ratio. This increase in leverage
will lessen Albertson’s ability to obtain more capital and make that capital more expensive, thereby
64. The Merger Agreement’s terms additionally heavily limit Albertsons’ ability and incentive
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65. The Merger Agreement generally prohibits Albertsons from incurring additional
indebtedness and makes any exceptions subject to “the ordinary course of business consistent with
past practice.”
66. Payment of the Special Dividend is not part of Albertsons’ “ordinary course of business.”
67. Payment of the Special Dividend is not consistent—and, as detailed above, orders of
68. Under Defendants’ Merger Agreement, even refinancing existing debt, where the principal
is over $100 million, requires Albertsons to “reasonably consult[]” Kroger, supposedly its
69. Albertsons will be particularly ill-suited to seek debt financing while antitrust regulators
review the merger, both because of the restrictions Defendants agreed to in the Merger Agreement
and because Albertsons’ bond ratings are below investment grade. Based on Albertsons’ bond
rating, given the current economic downturn, it will have a harder time raising capital than other
companies.
70. The Special Dividend would thus reduce Albertsons’ ability to compete effectively with
Kroger pending the review of the Merger Agreement and leave Albertsons a weaker competitor
71. Even if Albertsons can recuperate this cash through the conduct of its business, money
spent replenishing the amount of cash and cash equivalents and paying down principle on debt is
money not spent on necessary improvements, pensions, and wages, while Albertson’s competitors
72. Albertsons’ reduced competitiveness will have market-wide effects. In general, economic
empirical research shows that when a supermarket chain becomes significantly more leveraged, it
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weakens competition among supermarket incumbents. Competition lessens across the board
because competitors know that the leveraged company will have fewer resources with which to
compete, and can therefore reliably pursue less “tough” competition. That is not surprising,
because researchers have also found that the food retail sector has characteristics that may threaten
competition, such as entry barriers, price-discrimination, collusion, and market division between
competitors. Economic research also supports the proposition that increased food retailer
73. The relevant line of commerce in this action is no broader than the retail sale of food and
74. “Supermarket” means any full-line retail grocery store that enables customers to purchase
substantially all of their weekly food and grocery shopping requirements in a single shopping visit,
typically with at least 10,000 square feet of selling space devoted to providing offerings across
many of at least the following product categories: bread and baked goods; dairy products;
refrigerated food and beverage products; frozen food and beverage products; fresh and prepared
meats and poultry; fresh fruits and vegetables; shelf-stable food and beverage products, including
canned, jarred, bottled, boxed, and other types of packaged products; staple foodstuffs, which may
include salt, sugar, flour, sauces, spices, coffee, tea, and other staples; other grocery products,
including nonfood items such as soaps, detergents, paper goods, other household products, and
health and beauty aids; pharmaceutical products and pharmacy services (where provided); and, to
75. Supermarkets provide a distinct set of products and services and offer consumers
convenient one-stop shopping for food and grocery products. Supermarkets typically carry more
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than 10,000 different items, typically referred to as stock-keeping units (SKUs), as well as a deep
76. Supermarkets compete primarily with other supermarkets that provide one-stop shopping
opportunities for food and grocery products. Supermarkets base their food and grocery prices
primarily on the prices of food and grocery products sold at other nearby competing supermarkets.
Supermarkets do not regularly conduct price checks of food and grocery products sold at other
types of stores and do not typically set or change their food or grocery prices in response to prices
77. Although retail stores other than supermarkets may also sell food and grocery products,
these types of stores—including convenience stores, specialty food stores, limited assortment
stores, hard-discounters, and club stores—do not, individually or collectively, provide sufficient
competition to effectively constrain prices at supermarkets. These retail stores do not offer a
supermarket’s distinct set of products and services that provide consumers with the convenience
of one-stop shopping for food and grocery products. The vast majority of consumers shopping for
food and grocery products at supermarkets are not likely to start shopping at other types of stores,
or significantly increase grocery purchases at other types of stores, in response to a small but
78. Discovery will permit Plaintiffs to fully define the metes and bounds of relevant geographic
markets in this case. In the District of Columbia, the relevant geographic market is no larger than
the District, and smaller relevant geographic markets likely exist within the District.
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consumers’ grocery shopping occurs at stores located very close to where they live or work.
80. In the District of Columbia specifically, many consumers are further limited in the distance
they will travel to shop at a supermarket by access to public transportation, with some wards in the
81. In response to a small but significant nontransitory increase in supermarket prices in the
District of Columbia, consumers would not shift their grocery purchases to supermarkets outside
the District of Columbia sufficiently to defeat the increase in prices. And in response to a small
but significant nontransitory increase in supermarket prices in smaller areas within the District of
Columbia that appropriate regulatory review will define, consumers would not shift their grocery
competition for supermarkets is local in nature. In Illinois, many Chicago residents lack cars and
must travel to grocery stores by walking or public transit, preventing them from traveling outside
the community areas in which they work or live to shop at alternative grocery stores. Thus, the
overwhelming majority of consumers’ grocery shopping occurs at stores located very close to
83. Lack of broadband access may also limit the options available for some Chicago residents
84. The relevant geographic markets in Illinois may include areas no larger than properly-
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85. The relevant geographic markets in California may include areas no larger than city and
suburb markets, where many residents shop within a half mile or mile of where they live or drive
short distances, although relevant geographic markets may be larger in more sparsely populated or
rural areas.
86. The Merger Agreement, and specifically the payment of the Special Dividend together with
other terms limiting Albertson’s ability to finance its operations, will significantly reduce
Albertsons’ ability to compete during the pendency of regulatory review of the merger, and
possibly beyond. By stripping Albertsons of necessary cash at a time when its deteriorating bond
ratings will make access to capital harder for Albertsons, this agreement between Kroger and
Albertsons curtails Albertsons’ ability to compete on price, services, other quality metrics, and
innovation. Because it increases Albertsons’ leverage, empirical economics suggests this reduction
87. As a result of this reduced competition, District of Columbia, California, and Illinois
residents likely will pay more for their groceries, and enjoy fewer promotions, worse service, and
fewer quality-improving investments than they would but for Defendants’ agreement to pay the
Special Dividend.
88. Albertsons’ inability to invest in its stores and its workforce also likely will harm workers
in the States, who will experience lower wage growth and worse working conditions than they
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COUNT I
(Against All Defendants for violation of Section 1 of the Sherman Act, 15 U.S.C. § 1)
89. The allegations contained in paragraphs 1 through 88 are realleged as though fully restated
herein.
90. The federal antitrust statutes empower the Attorneys General of the States of California
and Illinois, and the District of Columbia, to bring suit as parens patriae to protect the public
91. The Parties agreement to issue the Special Dividend on November 7, 2022, will lead to a
reduction in output and by Albertsons and render Albertsons less able to compete effectively with
92. The Special Dividend will be issued pursuant to an agreement between the horizontal
competitors of Kroger and Albertsons, and will therefore restrain trade in violation of 15 U.S.C.
§ 1.
93. Entry into the relevant markets would not be timely, likely, or sufficient in magnitude to
prevent or deter the likely anticompetitive effects of the merger. Significant entry barriers include
the time and costs associated with conducting necessary market research, selecting an appropriate
location for a supermarket, obtaining necessary permits and approvals, constructing a new
94. Defendants did not devise their strategy of using the Merger Agreement as a conduit for
payment of the Special Dividend for any procompetitive purpose. Nor does the payment of the
Special Dividend in the context of the merger have any procompetitive effects. Any arguable
benefits of the Special Dividend are outweighed by their actual and likely anticompetitive effects.
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COUNT II
95. The allegations set forth in paragraphs 1 through 94 are realleged as though fully restated
herein.
96. D.C. Code §§ 28–4502 and 28–4507 empower the Attorney General of the District of
Columbia bring suit to protect the public interest and the interests of the citizens of the District.
97. D.C. Code § 28–4515 provides that courts should interpret the District of Columbia
98. The Special Dividend will be issued pursuant to an agreement between the horizontal
competitors of Kroger and Albertsons, and will therefore restrain trade in violation of D.C. Code
§ 28–4502.
99. Entry into the relevant product markets in the District of Columbia would not be timely,
likely, or sufficient in magnitude to prevent or deter the likely anticompetitive effects of the
merger. Significant entry barriers include the time and costs associated with conducting necessary
market research, selecting an appropriate location for a supermarket, obtaining necessary permits
supermarket, and generating sufficient sales to have a meaningful impact on the market.
100. Defendants did not devise their strategy of using the Merger Agreement as a conduit
for payment of the Special Dividend for any procompetitive purpose. Nor does the payment of the
Special Dividend in the context of the merger have any procompetitive effects. Any arguable
benefits of the Special Dividend are outweighed by their actual and likely anticompetitive effects.
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COUNT III
(Against All Defendants for Violations of the Illinois Antitrust Act)
102. The Special Dividend will be issued pursuant to an agreement between the
horizontal competitors of Kroger and Albertsons, and will therefore restrain trade in violation of
103. Entry into the relevant product markets in Illinois would not be timely, likely, or
sufficient in magnitude to prevent or deter the likely anticompetitive effects of the Merger.
Significant entry barriers include the time and costs associated with conducting necessary market
research, selecting an appropriate location for a supermarket, obtaining necessary permits and
104. Defendants did not devise their strategy of using the Merger Agreement as a conduit
for payment of the Special Dividend for any procompetitive purpose. The Special Dividend is not
agreement. Nor does the payment of the Special Dividend in the context of the merger have any
procompetitive effects. Any arguable benefits of the Special Dividend are outweighed by their
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Case 1:22-cv-03357 Document 1 Filed 11/02/22 Page 26 of 27
a) Adjudge that Defendants’ Merger Agreement, to the extent it requires payment of the Special
Dividend, violates Section 1 of the Sherman Act 15 U.S.C. § 1, D.C Code § 28–4502, and
b) Enjoin Defendants from issuing or causing to be issued the Special Dividend, pending
completion of antitrust regulatory review of the Merger Agreement by all Plaintiffs; and
c) Order such other relief as the Court determines to be just and proper.
KARL A. RACINE
Attorney General for the District of Columbia
KATHLEEN KONOPKA
Senior Advisor to the Attorney General for
Competition Policy
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Case 1:22-cv-03357 Document 1 Filed 11/02/22 Page 27 of 27
ROB BONTA
Attorney General of California
KATHLEEN E. FOOTE
Senior Assistant Attorney General
NATALIE S. MANZO
Supervising Deputy Attorney General
KWAME RAOUL
Attorney General of Illinois
27