Kroger and Albertsons Merger Blocked: What's Next?

After two judges ruled against the merger proposal on Tuesday, Kroger’s $25 billion bid to acquire rival Albertsons has been delayed for at least a year and possibly forever, legal experts say.

A federal judge in Oregon and a judge in Washington state both issued court orders barring the Cincinnati-based supermarket giant from acquiring its next-largest competitor, headquartered in Boise, Idaho. Separately, both justices agreed with regulators that the merger posed a risk of reducing competition and also expressed doubt that Kroger’s divestiture plan would mitigate the loss of a strong competitor.

Both decisions are subject to appeal, and both Kroger and Albertsons issued statements acknowledging their disappointment but saying they would evaluate their next options.

Antitrust experts said the rulings were a major setback, but Kroger and Albertsons could continue fighting in court.

“It looks bleak — in any other merger, the companies would have already given up on this,” Christine Bartholomew, a law professor at the University at Buffalo, told The Enquirer. “So is fusion dead? Surpass me.”

What legal remedies would look like

To overturn the rulings, Kroger and Albertsons would have to appeal both decisions in separate courts.

The federal case would first be appealed to the U.S. Court of Appeals for the Ninth Circuit, based in San Francisco, where a panel of three federal judges could overturn the ruling. The FTC’s lawsuit to block the merger would still be heard in the agency’s internal administrative court before FTC commissioners make a final decision.

If Kroger and Albertsons lose the FTC decision, which most experts believe is likely, the grocers could appeal again to federal court to overturn that decision. If that appeal fails, Kroger and Albertsons could appeal again to the U.S. Supreme Court.

To challenge Washington state’s decision, the two supermarket chains must appeal to the state’s appeals court. However that decision is made, it could be appealed again to the state Supreme Court.

Further litigation could take months and create risks

Sounds complicated?

That’s because it is. And time consuming. And very expensive — the two retailers have already spent a total of $1.2 billion on their merger legal battle, according to their most recent financial disclosures.

Objections will extend by a year or more a merger deal that was first proposed more than two years ago and that Kroger and Albertsons had originally expected to close in early 2024. In addition to the uncertainty of convincing multiple judges, antitrust experts predict months of litigation threaten to distract grocers from day-to-day business. For this reason, most companies avoid lengthy antitrust litigation.

“Do you see any options beyond the very distant beam of light?” asked Douglas Ross, a professor of antitrust law at the University of Washington. “I think this merger is dead.”

Ross estimated it would take about a year to complete the FTC trial and issue a ruling, which would likely need to be appealed. He added that the state appeal in Washington, which would have to be pursued at the same time as the federal appeal, would take about the same amount of time. Further appeals would take another few months.

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