LAS VEGAS (Legal Newsline) - The attorneys general of Nevada and Washington on Friday asked two separate federal courts to stop the planned acquisition of various Safeway grocery stores in their states, arguing the proposed merger is unlawful and will hurt businesses.
Nevada Attorney General Adam Laxalt filed his lawsuit against Cerberus Institutional Partners V, AB Acquisition LLC -- the owner of Albertsons, an-Idaho based chain of supermarkets in the western and southwestern United States -- and Safeway Inc. in the U.S. District Court for the District of Nevada.
Washington Attorney General Bob Ferguson filed his suit against the same group of plaintiffs in the U.S. District Court for the Western District of Washington, in Seattle.
The filings come on the same day the companies announced the completion of their merger.
“We plan to be the favorite local supermarket in every community we serve,” Safeway President and Chief Executive Officer Robert Edwards said in a statement.
Edwards becomes president and CEO of the newly combined company, effective immediately.
Current Albertsons CEO Bob Miller becomes executive chairman.
“This is a transformative day for both Albertsons and Safeway,” Miller said in a statement. “This merger creates a unified, strong organization that is dedicated to bringing a better shopping experience to more customers across the country.”
According to the companies, the merger will create a “diversified network” that includes 2,230 stores, 27 distribution facilities and 19 manufacturing plants with more than 250,000 employees across 34 states and the District of Columbia.
The companies announced the transaction, valued at nearly $9.2 billion, last March.
The attorneys general argue that under U.S. Department of Justice and Federal Trade Commission guidelines and relevant case law, the acquisition is “presumptively unlawful.”
“The Proposed Acquisition will substantially increase concentration in each of the relevant geographic markets, whether measured by the Merger Guidelines’ standard measure of market concentration, the Herfindahl-Hirschman Index (‘HHI’) or by the number of competitively significant firms remaining in each market post-acquisition,” they wrote in their complaints.
Under the HHI, an acquisition is presumed to create or enhance market power or facilitate its exercise if it increases the HHI by more than 200 points and results in a post-acquisition HHI that exceeds 2,500 points.
Simply put, the attorneys general argue the merger will “substantially lessen” competition. They also fear food prices will increase while quality will decrease.
The companies could not immediately be reached for comment on the lawsuits.
From Legal Newsline: Reach Jessica Karmasek by email at email@example.com.