Kroger-Albertsons deal is blocked by a federal judge
A federal judge has ruled against Kroger’s $25 billion takeover bid for Albertsons, granting a preliminary injunction blocking the deal.
After holding a more than three-week "mini-trial" in August and September, Judge Adrienne Nelson decided the Federal Trade Commission's case to stop the deal was "likely to succeed." She also granted the order to block the merger until the agency's in-house judge decides for or against the deal.
"Plaintiffs (the FTC) are likely to succeed on the merits and the equities weigh in favor of an injunction. Accordingly, plaintiffs' motion for preliminary injunction is granted," Nelson wrote in her decision.
The FTC applauded the decision, saying it was good for consumers:
"Today's win protects competition in the grocery market, which will prevent prices from rising even more," spokesman Douglas Farrar said in a statement. "(It) makes it clear that strong, reality-based antitrust enforcement delivers real results for consumers, workers, and small businesses."
Though a major setback for the grocers, the ruling is subject to appeal. Neither the grocers were immediately available to discuss their next legal move.
A separate ruling in Washington state's antitrust case against the merger was also scheduled to be issued Tuesday.
A big, controversial deal from the start affecting millions of shoppers
Originally pitched in October of 2022, the merger proposal drew immediate controversy, attracting the opposition of politicians as well as consumer and union groups. One of the largest proposed mergers in the history of the retail industry, the outcome of the deal would affect millions of consumers, the ownership of nearly 5,000 stores and the employment of some 700,000 workers.
Cincinnati-based Kroger and its Boise, Idaho, rival Albertsons claimed teaming up would allow them to be more efficient and compete more effectively against nontraditional grocers, such as Walmart, Costco and Amazon. The supermarket chains said they would be able to pass along $1 billion in savings to consumers and preserve union jobs. They pledged no front-line jobs would be cut or stores would be closed in the deal.
Divestiture deal didn’t calm competitive concerns
Kroger and Albertsons attempted to blunt antitrust concerns when they arranged to sell off 579 stores to a major supermarket supplier: C&S Wholesale Foods, but critics expressed concerns the New Hampshire-based company wasn’t an experienced retail grocer and may ultimately choose to resell or even close hundreds of divested stores. Regulators and unions also worried about the job security of the 60,000 workers at the stores being sold.
But earlier this year after months of investigations, the Federal Trade Commission and the state attorneys general of Washington and Colorado separately sued to stop the merger, claiming it would reduce competition and ultimately lead to higher prices for consumers as well as risk store closures and lost jobs for workers.
Merger sought during a period of historic food inflation
The legal fight has taken place as American consumers have seen their grocery bills skyrocket nearly 25% since March of 2020 compared with the overall inflation of less than 22% in the same period, according to the U.S. Bureau of Labor Statistics. The rate of the increase of food prices has ebbed significantly but only notched a pre-COVID-19 level in August. Economists blame the worst inflation since the late 1970s and early 1980s on the fallout from the COVID-19 pandemic and the Russian invasion of Ukraine.
How would the merger affect America?
While some recent mergers in tech and other industries sport larger dollar values, other numbers reveal the outsize impact of a Kroger-Albertsons combination.
The total employees at both companies represent one out of six of all U.S. supermarket, supercenter and warehouse club workers. The rivals' combined nearly $180 billion food sales (excluding gas and pharmacy) also account for nearly one of every six of the nearly $1.1 trillion Americans spend on groceries.
How big would Kroger get if the merger went through?
Cincinnati-based Kroger proposed to buy all outstanding shares of Boise, Idaho-based Albertsons, adding most of its 285,000 employees and nearly 2,300 stores to its supermarket operation.
If the deal is completed and after the divestiture of nearly 600 stores, Kroger would:
- Operate more than 4,400 supermarkets, up from 2,700 right now.
- Generate about $208 billion in annual sales, compared to $150 billion.
- Employ about 640,000 workers, up from about 414,000 currently. That would make it one of the 10 largest private employers in the world.
The Enquirer will update this story.
For the latest on Kroger, P&G, Fifth Third Bank and Cincinnati business, follow @alexcoolidge on X (formerly Twitter).