US court blocks Kroger’s $25 billion takeover of grocery rival Albertsons

By Jody Godoy

(Reuters) – A U.S. judge on Tuesday blocked the pending $25 billion merger of U.S. grocery chains Kroger and Albertsons. This was a victory for the Federal Trade Commission that Kroger said would likely scupper the deal.

The FTC argued at a three-week trial in Portland, Oregon, that the merger would eliminate direct competition between the two largest traditional grocery chains, leading to higher prices for shoppers and less bargaining power for unionized workers.

The ruling, which could be appealed, is a major victory for FTC Chairwoman Lina Khan and the Biden administration in their attempt to counter inflation at the checkout. Americans’ dissatisfaction with the continued rise in food prices since the pandemic was a central theme leading up to President-elect Donald Trump’s election victory in November.

U.S. District Judge Adrienne Nelson agreed that the merger would likely eliminate direct competition between the two grocers, making it illegal.

A Washington state judge in Seattle ruled Tuesday to block the merger in a case brought by Attorney General Bob Ferguson.

Albertsons shares closed down 2.3%. Kroger shares closed up 5.1%.

FTC spokesman Douglas Farrar said the ruling “protects competition in the grocery market, which will prevent prices from rising even further.”

“This Declaration victory makes clear that strong, reality-based antitrust enforcement delivers real results for consumers, workers and small businesses,” Farrar said.

Spokespeople for Kroger and Albertsons said the companies were disappointed by the rulings and the review of their options.

“Through the proposed merger with Albertsons, Kroger would invest more than $1 billion in lower grocery prices, another $1 billion in higher wages for grocery workers and another $1.3 billion in improving Albertsons stores,” said the Kroger spokesman.

“We believe we have clearly articulated throughout the process how the proposed merger would increase competition, reduce prices, increase employee wages, protect union jobs and improve the customer shopping experience,” the Albertsons spokesperson said.

FOOD COST

The deal became a symbol of rising food prices. U.S. food prices have risen 25% over the past four years, and while food inflation shows signs of cooling in 2024, grocery bills continue to be a growing concern for shoppers.

The FTC sued along with attorneys general from eight states and the District of Columbia. Washington, where the attorney general estimates that half of all supermarkets are owned by one of the two chains, and Colorado have sued alone to block the deal.

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