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caption: Mitch Maddox, a bread route salesman, loads bread Tuesday, May 30, 2006, outside the Eagle Rock Albertsons store in Los Angeles.
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Mitch Maddox, a bread route salesman, loads bread Tuesday, May 30, 2006, outside the Eagle Rock Albertsons store in Los Angeles.

AG objection to Albertsons' proposed $4 billion payout reaches state's highest court

This could be the week when grocery chain Albertsons learns whether it can go ahead and pay $4 billion to its shareholders. The payment was planned when Albertsons and rival Kroger announced they were merging last fall. But the Washington Attorney General’s Office is trying to block payment until the merger is completed.

The Attorney General’s Office has argued that Albertsons paying out the dividends before the merger would drain Albertsons’ cash reserves and have a negative impact on workers and consumers.

But a King County Superior Court judge wasn’t convinced. Last December, the judge ruled in favor of Albertsons. Now the state’s high court will decide whether to take up the Attorney General’s appeal.

“They’ve got to first persuade the Supreme Court that there’s an agreement between Kroger and Albertsons to pay a dividend so as to weaken Albertsons," said Douglas Ross, who teaches antitrust law at the University of Washington. "And the state also has to show that if there were such an agreement it would be anti-competitive.”

Albertsons calls the state’s claims meritless. The company says paying the dividend is well within its financial means and will not harm the company.

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