A federal judge on Tuesday temporarily blocked Kroger’s $24.6 billion acquisition of Albertsons, ruling that the proposed union would lessen competition for grocery shoppers.
The preliminary injunctions issued by an Oregon court found in favor of the Federal Trade Commission, which had argued the deal would violate antitrust law.
The judge’s ruling “effectively ends the likelihood of a deal taking place,” according to Neil Saunders, managing director, GlobalData. “Of all the cases the FTC has litigated over the past few years, this one was the most sensitive as it involved two huge firms supplying essential goods,” the retail analyst added.
The FTC in February sued to block the proposed merger, with the agency joined in its suit by eight state attorneys general and the District of Columbia.
“Today’s win protects competition in the grocery market, which will prevent prices from rising even more. This statement win makes it clear that strong, reality-based antitrust enforcement delivers real results for consumers, workers, and small businesses,” an FTC spokesperson stated.
Albertsons defends deal
The companies agreed to join in October 2022, arguing their union was needed to better compete with Amazon, Costco, Walmart and other larger rivals.
Albertsons expressed disappointment with the judge’s ruling pausing the deal and said the company is exploring its legal and strategic options.
“We believe we clearly outlined during the proceedings how the proposed merger would expand competition, lower prices, increase associate wages, protect union jobs and enhance customers’ shopping experience,” the company said in a statement.
Kroger did not immediately respond to a request for comment.
Kroger, based in Cincinnati, Ohio, operates 2,750 stores in 35 states and the District of Columbia, including brands like Ralphs, Smith’s and Harris Teeter. Albertsons, based in Boise, Idaho, operates roughly 2,300 stores in 34 states, including brands like Safeway, Jewel Osco and Shaw’s. Together the companies employ around 700,000 people.
Kroger has promised to invest $500 million to lower prices as soon as the deal closes. It said it also invested in price reductions when it merged with Harris Teeter in 2014 and Roundy’s in 2016. Kroger also pledged to invest $1.3 billion in store improvements at Albertsons as part of the deal.
The FTC, which said the proposed deal would be the largest grocery merger in U.S. history, said it would also erase competition for workers, threatening their ability to win higher wages, better benefits and improved working conditions.
