Albertsons Executives Accused of Destroying Evidence in Kroger Deal

The Federal Trade Commission (FTC) has accused Albertsons executives, including CEO Vivek Sankaran, of deleting and concealing text messages relevant to the government's investigation into a proposed acquisition by Kroger.

In a court filing last week, the FTC alleged that several Albertsons executives appeared to have wiped messages from their phones. The commission has asked the court to consider this as "adverse inference" when assessing testimony from these individuals during upcoming hearings. The hearings are scheduled to begin next week in Portland, Oregon.

BoiseDev, a local news website, will be covering the hearings and will provide comprehensive coverage next week.

Albertsons has not yet publicly responded to the FTC's accusations, but it has told the court it will respond. However, its response remains under seal and is not yet publicly available.

The FTC alleges that four out of eight Albertsons employees who are expected to be called as witnesses at the trial appear to have deleted messages from their phones, either manually or through an automatic deletion feature.

"Although the court and plaintiffs will never know the full extent of these lost communications, their destruction serves to obscure internal views about the likely effects of the merger and the proposed divestiture," FTC lawyers wrote. "At least one thread—although stripped of its full context—still reveals one Albertsons executive’s assessment that the merger will likely increase prices."

The FTC initiated its investigation into the proposed acquisition in 2022, after Kroger announced its intention to buy Albertsons. The commission specifically requested that both companies cease all document destruction activities.

However, the FTC says that Albertsons provided files with a peculiar one-sided conversation involving Denver Division President Todd Broderick. When questioned about the missing messages, Albertsons claimed that Broderick's "apparent one-sided conversations were not on this iPhone" and that "this may have been because of settings on the iPhone that automatically delete files after a period of time."

In January 2023, the FTC requested a detailed accounting of the deleted text messages and what steps Albertsons had taken to recover them. Four months later, Albertsons claimed to have retrieved an additional 70 deleted texts from Sankaran's phone.

The FTC argues that Albertsons has "downplayed the seriousness of their failed preservations efforts" and has claimed that all relevant information has been provided.

However, the FTC points to a specific instance involving Broderick's messages that appears suspicious. While Broderick's messages from November 29, 2022 – after the FTC's request to preserve relevant communications – appear to be deleted, messages from December 2, 2022, include sentiments defending the proposed merger. The FTC suggests that if Broderick's messages were automatically deleted, those from December 2 would have been missing as well.

Furthermore, the FTC alleges that "Mr. Broderick’s text messages… about the proposed merger… reveal Albertsons’ executives’ candid opinions about the competitive impacts the merger will have and appeared to have been manually deleted."

The FTC also highlighted discrepancies in the text messages provided by Albertsons COO Susan Morris, initially providing only nine messages before producing 900 additional text message exchanges last week, after her deposition and before the hearing. These messages include an email from Morris stating "we are being bought by our enemy."

The FTC emphasizes that the use of an "auto-delete" feature does not change the fact that Albertsons' failure to preserve communications indicates "willful destruction of evidence."

The upcoming hearings are expected to shed further light on the FTC's allegations and the potential impact of the deleted text messages on the government's case against the proposed acquisition.