Grocery chain Kroger countersued rival Albertsons on Tuesday, escalating a legal fight between the two companies following the demise of their proposed $25 billion merger that was blocked by courts in December.

Albertsons terminated the bid to merge immediately after the deal was blocked and sued Kroger, alleging a breach of contract that led to the deal’s demise.

The formal termination ended a two-year effort by the grocery chains to combine. Regulators had noted that the deal would lead to higher prices for shoppers.

In court papers filed Tuesday in the Delaware Court of Chancery, Kroger said Albertsons disregarded the companies’ merger agreement and worked secretly with a partner, C&S Wholesalers, to try to force Kroger to divest more stores to C&S.

Kroger also claimed that Albertsons was secretly planning to sue Kroger if the deal didn’t go through long before the merger actually fell apart.

In December, Albertsons asked for billions of dollars in damages along with a $600 million termination fee.

“As a result of its misconduct, Albertsons is not entitled to the $600 million termination fee … nor is Albertsons entitled to the other damages it seeks,” Kroger said.

In a statement Tuesday, Albertsons said it was Kroger that failed to honor the merger agreement.

“Kroger’s self-interested conduct doomed the merger, and we are now focused on returning value to Albertsons’ shareholders to compensate for those losses,” Albertsons said.

Kroger and Albertsons first proposed the merger in 2022. They argued that combining would help them better compete with big retailers like Walmart and Costco.

But the Federal Trade Commission and two states — Washington and Colorado — sued to block the merger last year, saying it would raise prices and lower workers’ wages by eliminating competition. It also said Kroger and Albertsons’ plan to divest 579 stores C&S Wholesalers was inadequate to ensure competition, since C&S was ill-equipped to take on so many stores.

In December, judges in Washington and Oregon halted the merger in two rulings issued within hours of each other.

Kroger said even after lower courts ruled, it believed the merger still had a chance of going through. Kroger said it told Albertsons it was planning to reengage with the FTC after President Donald Trump’s election because it thought the FTC under Trump would be less hostile to mergers.

But instead, Albertsons filed a lawsuit against Kroger the day after the lower court rulings. Albertsons said Kroger refused to divest more stores, even as it became clear that regulators weren’t satisfied with its plans. Albertsons said Kroger also should have sought other buyers beyond C&S to satisfy regulators’ concerns.