Kroger’s $24.6 billion purchase of Albertsons halted by federal judge
On Tuesday, a federal judge temporarily blocked Kroger’s $24.6 billion bid for Albertsons ruled the proposed alliance would reduce competition for grocery shoppers.
An Oregon court issued a preliminary injunction in favor of the Federal Trade Commission, which found the deal violated antitrust laws.
Neil Saunders, managing director of GlobalData, said the judge’s ruling “effectively ends the possibility of a deal being done”. The retail analyst added: “Of all the cases the FTC has filed over the past few years, this one is the most sensitive because it involves two large companies that supply essential goods.”
Federal Trade Commission February sue to prevent Eight state attorneys general and the District of Columbia also joined the agency’s lawsuit over the proposed merger.
Henry Liu, director of the agency’s Bureau of Competition, said: “This historic victory protects millions of Americans across the country from rising prices for basic foods, from milk to bread to eggs, ultimately making More money in consumers’ pockets,” said in a statement. “This victory has a direct, tangible impact on the lives of millions of Americans who shop at Kroger or Albertsons-owned grocery stores for their daily needs, whether it’s Fry’s in Arizona, Von’s in Southern California Or Jewel-Osco, Illinois.”
Company defends 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. Headquartered in Boise, Idaho, Albertsons operates approximately 2,300 stores in 34 states, including brands such as Safeway, Jewel Osco and Shaw’s. Together, these companies employ approximately 700,000 people.
The retailers agreed to join forces in October 2022, arguing the alliance would help them compete with Amazon, Costco, Walmart and other larger rivals.
Albertsons expressed disappointment with a judge’s ruling on Tuesday to halt trading and said the company was exploring its legal and strategic options.
“We believe our proceedings clearly outlined how the proposed merger would expand competition, lower prices, raise employee wages, protect union jobs and strengthen customers,” the company said in a statement to CBS News shopping experience.”
Kroger also said the merger would promote 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 U.S. District Court for the District of Oregon and the Washington State Court that ignored the substantial evidence presented at trial that a merger between Kroger and Albertsons would advance the company for decades. Commitment to reducing energy consumption, price, respecting collective bargaining agreements and acting in the best interests of customers, employees and the wider competitive environment in the rapidly evolving grocery sector.”
Kroger promised to invest $500 million to lower the price after the deal was completed. The company said it also invested in price cuts when it merged with Harris Teeter in 2014 and Roundy’s in 2016. As part of the deal, Kroger also committed to investing $1.3 billion in Albertsons store improvements.
The FTC said the proposed deal would be the largest grocery merger in U.S. history and said it would also eliminate competition for workers, threatening their ability to win higher wages, better benefits and improved working conditions.
The United Food and Commercial Workers International Union (UFCW), which represents grocery store and other food industry workers, applauded the court’s ruling.
“We are pleased that the court listened to the concerns expressed by our hardworking members and rejected the proposed mega-merger between Kroger and Albertsons,” UFCW International President Marc Perrone said in a statement. “We propose Questions were answered throughout the process by lawmakers, economists, attorneys general, consumers and the Federal Trade Commission.”
