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- Kroger countersued Albertsons after their $25 billion merger collapsed in December.
- Albertsons claims Kroger breached the contract, seeking damages and a $600 million fee.
- Kroger alleges Albertsons engaged in misconduct during antitrust trials, denying termination fee entitlement.
CINCINNATI — Grocery chain Kroger countersued Albertsons on Tuesday, escalating a legal battle between the companies following the collapse of their proposed $25 billion merger in December.
Albertsons terminated the merger immediately after courts blocked it and sued Kroger, alleging a breach of contract that led to the deal falling apart.
The formal termination ended a two-year effort by the grocery chains to combine that regulators — who moved to stop the deal — said would eliminate competition, cause higher prices and reduce leverage for unionized workers.
In December, Albertsons asked for billions of dollars in damages along with a $600 million termination fee. Kroger had called the claims baseless.
Albertsons engaged in a campaign with divestiture buyer C&S Wholesale Grocers to pursue its own regulatory strategy, Kroger said on Tuesday.
"Albertsons' misconduct shockingly came to light in the middle of the antitrust trials under government cross examination of Susan Morris, Albertsons' recently promoted CEO designate," Kroger said.
The supermarket chain said Albertsons was not entitled to the termination fee or other damages due to its "misconduct."
"Kroger's weak claims are a deliberate tactic to distract from its own ongoing executive leadership issues; blatant and recurring failures to carry out its contractual obligations under the merger agreement; and avoid paying the damages it owes," Albertsons told Reuters in an emailed statement.
In early March, Kroger CEO Rodney McMullen resigned after a board investigation found that his personal conduct was "inconsistent" with certain company policies.
The same day, Albertsons said its CEO Vivek Sankaran would retire, and insider Morris would assume the top role.
Kroger said the counterclaim aimed to seek damages from Albertsons to recover the investment it had made to obtain regulatory approval for the merger.
The grocer also added in the counterclaim it appeared that Albertsons had shifted its focus toward the current legal battle long before instead of pushing to close the transaction.
However, Albertsons said on Tuesday it was "committed to the success of the combination from the outset," and it was Kroger who did not hold up its end of the bargain.
"We look forward to presenting our case in court," Albertsons said.
Contributing: Juveria Tabassum
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