The proposed merger between supermarket chains Kroger and Albertsons, which would be the largest in U.S. history, is facing legal challenges as it heads to court. The companies argue that the merger would enhance their competitiveness against rivals like Costco. On the other side, antitrust regulators from the Federal Trade Commission (FTC) are concerned that the merger would stifle competition and hike grocery prices during a period of already heightened food price inflation.
A federal district court judge in Portland, Oregon, will begin hearing arguments from both sides on Monday to determine whether to grant the FTC’s request for a preliminary injunction. This injunction would stall the merger while the FTC pursues an in-house case against the deal before an administrative law judge. Kroger, based in Cincinnati, Ohio, operates 2,800 stores in 35 states, while Albertsons, headquartered in Boise, Idaho, has 2,273 stores in 34 states. Combined, the companies employ approximately 710,000 individuals.
The $24.6 billion merger plans were announced by Kroger and Albertsons in October 2022 as a strategic move to lower prices, improve supplier negotiations, and consolidate store brands to better compete with major players like Walmart, which currently holds a 22% share of U.S. grocery sales. Despite the potential benefits touted by the companies, the FTC and multiple state attorneys general are resisting the merger, citing concerns that it could lead to reduced competition, increased prices, and diminished working conditions for employees.
If approved, Kroger and Albertsons have pledged to sell 579 stores in overlapping locations to prevent monopolistic practices. C&S Wholesale Grocers, an independent supermarket supplier based in New Hampshire, is set to acquire these stores. Should the Oregon judge issue a preliminary injunction, it is expected that Kroger and Albertsons would challenge the decision in a higher court, leading to a potentially protracted legal battle that might sway the fate of the merger. Additionally, states like Colorado and Washington have taken their own legal actions in state courts to block the merger, showing the widespread concern over its potential effects.
