A federal judge on Tuesday temporarily blocked Kroger’s acquisition of Albertsons for $24.6 billion, ruling that the proposed merger would reduce competition for grocers.
Preliminary injunctions issued by an Oregon court ruled 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 settlement,” according to Neil Saunders, CEO of GlobalData. “Of all the cases the FTC has litigated over the past few years, this was the most sensitive, as it involved two large companies supplying essential goods,” the retail analyst added.
The FTC in February sued to block the proposed merger, with the agency joined in its lawsuit by eight state attorneys general and the District of Columbia.
“Today’s victory protects competition in the grocery market, which will prevent prices from rising even further,” FTC spokesman Douglas Farrar said in a statement. “This filing victory makes it clear that strong, reality-based antitrust enforcement delivers real results for consumers, workers and small businesses.”
The companies are defending the deal
Kroger, headquartered in Cincinnati, Ohio, operates 2,750 stores in 35 states and the District of Columbia, including brands such as Ralphs, Smith’s and Harris Teeter. Boise, Idaho-based Albertsons operates approximately 2,300 stores in 34 states, including brands such as Safeway, Jewel Osco and Shaw’s. Together, the companies employ around 700,000 people.
The retailers agreed to join forces in October 2022, arguing that the union would help them compete with Amazon, Costco, Walmart and other larger rivals.
Albertsons expressed disappointment at the judge’s decision Tuesday to halt the deal and said the company is exploring its legal and strategic options.
“We believe we clearly outlined during the proceeding how the proposed merger would expand competition, lower prices, increase associate wages, protect union jobs, and improve the customer shopping experience,” the company said in a statement to CBS News.
Kroger also said the merger would increase competition in the grocery industry and benefit consumers and employees. The company said in a statement:
“Kroger is disappointed with the opinions issued by the United States District Court for the District of Oregon and the Washington State District Court, which ignore substantial evidence presented at trial showing that a merger between Kroger and Albertsons it would advance the company’s decades-long commitment to lower prices, respecting collective agreements, and is in the best interest of customers, associates and the broader competitive environment in a rapidly evolving grocery landscape.”
Kroger has promised to invest $500 million to lower prices as soon as the deal closes. It said it also invested in price cuts 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 wipe out competition for workers, threatening their ability to win higher wages, better benefits and better conditions of work