The proposed merger of Kroger and Albertsons has been halted by federal judges
A proposed merger between supermarket giants Kroger and Albertsons hit a snag Tuesday after judges presiding over two separate cases blocked the merger.
US District Court Judge Adrienne Nelson issued a preliminary injunction to block the merger on Tuesday after holding a three-week hearing in Portland, Oregon.
Later on Tuesday, Judge Marshall Ferguson in Seattle issued an order blocking the merger in Washington after concluding that it would reduce competition in the state.
Kroger and Albertsons said Tuesday they were disappointed by the decisions and were reviewing their options. The companies could file an appeal, though the deal could fall apart in the time it takes for those cases to be processed.
Kroger and Albertsons in 2022 are proposing what would be the largest supermarket merger in US history. But the Federal Trade Commission sued earlier this year, asking Nelson to block the $24.6 billion deal until an internal FTC regulatory judge could review the merger's implications. The attorneys general of Arizona, California, Illinois, Maryland, Nevada, New Mexico, Oregon, Wyoming and the District of Columbia joined the FTC lawsuit.
Nelson agreed to halt the merger, saying the FTC had shown it was likely to succeed in an administrative hearing.
“Any harm the defendants suffer as a result of the injunction does not overcome the strong public interest in the application of antitrust law, especially given the difficulty of prematurely severing a merger,” he wrote in his opinion.
Federal regulators argue that merging the two chains would be bad for consumers and workers by eliminating competition.
The companies said the merger would help them better compete with big retailers like Walmart, Costco and Amazon. Kroger also pledged to invest $1 billion in lower grocery prices, another $1 billion in higher wages for grocery workers and $1.3 billion to improve Albertsons stores. But Nelson didn't move.
“A promise to make a price investment is not legally binding, and the court should give limited weight to the non-binding promise made during these proceedings,” he wrote in his decision. Nelson added that companies could still invest in lower prices if the FTC approves the merger in its administrative hearings.
The federal case now goes to the FTC, although Kroger and Albertsons have asked a separate federal judge to block internal proceedings. Colorado is also trying to stop the merger in its own state lawsuit.
The FTC asserted that Kroger and Albertsons currently compete in 22 states, closely matching each other on price, quality, private label products and services such as store pickup. The merger would eliminate that competition and raise prices for already struggling consumers, the government said. The FTC also said the merger would hurt workers since Kroger and Albertsons would no longer compete to hire them.
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