After weeks of arguing in a Denver courtroom over the statewide effects of what could have been the largest grocery merger in the U.S., it’s still unclear what a local judge will rule.

But for Colorado Attorney General Phil Weiser, the state has basically won.

On Wednesday morning, Safeway’s parent company Albertsons announced it is backing out of its agreement with Kroger, operator of the state’s King Soopers and City Market stores, and will sue the grocer for not doing enough to appease regulators alarmed by the $24.6 billion deal.

It comes after two judges who ruled against the merger Tuesday in trials conducted in Oregon and Washington, leaving Colorado as the sole case still awaiting a ruling.

Albertsons declined further comment. A Kroger spokesperson said said company officials are “disappointed” by the rulings and are reviewing options. The spokesperson also denied Albertsons allegations and claimed Albertsons interfered throughout the merger process. 

Still, Colorado’s attorney general isn’t letting his guard down and said at a press conference Wednesday morning the state’s lawsuit is still ongoing.

Weiser believes a decision from Denver District Court Judge Andrew Luxen is coming “soon,” he said.

Before the Colorado trial began in September, Weiser told reporters he’d still pursue the anti-merger lawsuit regardless if other rulings come first. He committed to pushing the state’s case until the grocers fully backed out of the merger.

The attorney general said Wednesday that even though Albertsons announced it wanted to break its agreement with Kroger, the grocers still have to prove to the court that the deal is dead.

In addition, Colorado’s case is unique because the state is also suing the grocers for an alleged illegal “non-poach agreement” of workers and pharmacy prescriptions during the King Soopers strike in 2022, which the judge will rule on as well.

Exec emails amidst 2022 Denver King Soopers strike at center of merger trial

It’s a separate case from a new class action lawsuit from union workers filed last month over the alleged collusion the grocers denied taking part in.

“We want to make sure we prevail and we get a decision on both those counts, as well as ensuring we permanently stop the merger,” Weiser said.

What happens to Colorado’s Kroger-Albertsons merger trial if other cases finish first

Luxen ruled to temporarily pause the merger with a preliminary injunction in July ahead of the trial, which Weiser said the ruling showed the judge agrees the merger is “reasonably likely” to be illegal. The grocers said at the time they came to an agreement with the state’s legal team to place the injunction to save on legal resources.

If the Denver judge breaks away from the other judges and rules in favor of the merger, Weiser explained the legal challenges the grocers face in the other courts is already a hefty uphill battle.

“I don’t even believe the Colorado case can save the companies,” Weiser said.

The end of lengthy court dealings?

Albertsons and Kroger are two of the largest grocers in the state.

The merger would have affected about 100 stores in Colorado. If the merger went through, Kroger would have converted 14 stores in Colorado to a King Soopers or City Market store and divested 91 stores and the Safeway brand name to C&S Wholesale Grocers, who regulators worried didn’t have sufficient retail experience to operate them.

Weiser announced the state’s lawsuit in February after conducting 19 town halls across the state and hearing from residents and from local farmers worried about the merger’s competitive effects.

Kroger’s mountain town pricing strategy under scrutiny in Colorado merger trial

The grocers at the time said the deal would have lowered prices for consumers and helped them compete against a changing grocery landscape with the rise of Walmart, Costco and Amazon.

During the Colorado trial, the attorney general’s legal team pressed Kroger for its mountain town pricing strategy in “no-comp zones,” areas in Colorado with little-to-no competition where the grocer spiked prices more than other stores to boost its revenues.

C&S Wholesale Grocers tapped Susan Morris, a seasoned Albertsons executive whose career began in Denver — and who herself had doubts about the merger at first — to run its new national operations and ease regulators’ concerns.

But a federal and state court sided with regulators who worried the deal would raise prices for shoppers already battered by inflation and the divestiture wouldn’t be sufficient to maintain a competitive landscape.

Colorado’s legal team accused the divestiture buyer C&S Wholesale Grocers of being a “distributor” and a “retail liquidator.”

Albertsons publicly expressed frustration with Kroger’s choice for the divestiture for the first time Wednesday in its announcement of the lawsuit. The company alleged Kroger ignored antitrust official’s feedback, didn’t cooperate with Albertsons, refused to divest assets needed to get approval and rejected “stronger” buyers.

During the Colorado trial, a grocery expert testified he saw Kroger’s list of interested buyers and saw better options including two popular grocery brands not yet in Colorado: Save Mart and Aldi.

Aldi, Save Mart may have tried to buy Colorado stores in Kroger merger divestiture sale

Albertsons’ statement said the rulings could have been avoided if Kroger acted in better faith.

“Rather than fulfill its contractual obligations to ensure that the merger succeeded, Kroger acted in its own financial self-interest, repeatedly providing insufficient divestiture proposals that ignored regulators’ concerns,” Tom Moriarty, Albertsons’ general counsel and chief policy officer, said in the release.

A Kroger spokesperson said the claims were “baseless and without merit,” adding the grocer will fight it in court.

“We went to extraordinary lengths to uphold the merger agreement throughout the entirety of the regulatory process and the facts will make that abundantly clear,” the spokesperson said.

Weiser pointed out Albertsons frustrations with the divestiture during Wednesday’s conference, saying it benefited the state’s case.

“That’s, in effect, agreeing with part of what our case was,” Weiser said. “And the so-called divestiture remedies that were offered were insufficient to protect consumers.”