Judge blocks $25 billion Albertsons-Kroger supermarket merger

A U.S. district judge in Oregon has blocked a $25 billion bid by supermarket giant Kroger to acquire rival Albertsons, ruling that the Federal Trade Commission’s concerns about the merger’s impact on market consolidation were legitimate.

Judge Adrienne Nelson said Tuesday afternoon that a merger between the two companies would ultimately harm consumers.

The two companies “face significant head-to-head competition, and the proposed combination would eliminate that competition,” Ferguson wrote. As a result, the proposed merger would likely lead to results that are “unilaterally” harmful to consumers and are therefore “presumably unlawful”.

Ferguson also ruled that the merger would be harmful to workers, arguing that greater consolidation would reduce workers’ bargaining power.

Albertsons said in a statement that it was “disappointed by the U.S. District Court’s decision to grant the FTC’s request for a preliminary injunction.”

“We believe we have clearly demonstrated throughout the process how the proposed merger would increase competition, reduce prices, increase employee wages, protect union jobs and improve the customer shopping experience. “We are carefully reviewing the court’s opinion and evaluating our options in accordance with the merger agreement,” it said.

A Kroger spokesman also expressed disappointment, saying the company is “currently evaluating its options.”

Cincinnati-based Kroger said a court ruling like this would effectively derail the merger.

The FTC welcomed the decision, saying the agency had “achieved a major victory for the American people by successfully blocking Kroger’s acquisition of Albertsons.”

“This victory has a direct, tangible impact on the lives of millions of Americans who shop for everyday needs at Kroger or Albertsons grocery stores, whether at Fry’s in Arizona, Von’s in Southern California or Jewel-Osco in Illinois.” said the FTC in a statement.

Kroger shares closed up 5% on Tuesday, while shares of Boise, Idaho-based Albertsons closed 2% lower.

Kroger had argued that the deal was necessary to continue to compete with major retailers such as Walmart and Target, as well as Amazon, which have significantly expanded their grocery business.

However, Nelson said that supermarkets still represented a niche market in their own right within the US consumer landscape and that the impact of the proposed merger would need to be taken into account.

The ruling is a victory for the Biden administration and particularly for FTC Chairwoman Lina Khan, who has taken an unprecedentedly aggressive approach to combating mergers that could lead to the creation of monopolies.