The Albertsons logo is displayed in front of an Albertsons supermarket on October 14, 2022 in Los Angeles, California. (Mario Tama/Getty Images)
Judges in Oregon and Washington on Tuesday blocked the merger of supermarket giants Kroger and Albertsons, casting doubt on the future of the $24.6 billion largest proposed supermarket merger in U.S. history.
Judge Adrienne Nelson of the U.S. District Court in Portland temporarily halted the merger, writing in her 71-page ruling in a lawsuit against the merger led by federal regulators that it would lead to excessive market concentration, reduce competition and harm customers. Her preliminary injunction pauses the proposed $24.6 billion merger while the Federal Trade Commission’s administrative law judge continues its investigation into the impact.
Judge Marshall Ferguson of King County Superior Court in Seattle also ruled that the Washington merger could not proceed in a separate state case, saying the proposed merger violated state antitrust laws. A state lawsuit is still pending in Colorado.
The rulings mean Kroger’s proposal to buy Albertsons will be put on hold in 2022 while the companies decide whether to proceed. If they do, an internal Federal Trade Commission administrative law judge will determine whether the merger is anticompetitive, although a Kroger lawsuit is seeking to block that review.
The FTC, joined by several states including Oregon, filed a lawsuit in February seeking to block the merger, saying it would eliminate competition, drive up costs and lead to lower-quality products and services. Henry Liu, director of the FTC’s Bureau of Competition, said in a statement that Tuesday’s ruling will protect Americans who shop for groceries and work in supermarkets.
“This historic victory protects millions of Americans across the country from higher prices on essential groceries – from milk to bread and eggs – ultimately allowing consumers to keep more money in their pockets,” Liu said. “This victory has a direct, tangible impact on the lives of millions of Americans who shop for their daily needs at Kroger or Albertsons grocery stores, whether that’s a Fry’s in Arizona, a Vons in Southern California or a Jewel-Osco in Illinois .”
Kroger operates approximately 2,700 stores in 35 states and the District of Columbia. The stores carry several brands across the country, including Fred Meyer in the Northwest, King Soopers in the Rocky Mountains, Fry’s in Arizona and Harris Teeter in the Southeast. About 430,000 people work for Kroger, according to court data, and it is the largest employer of union workers in grocery stores.
Albertsons, which merged with Safeway in 2015, is the nation’s second-largest grocery chain with approximately 285,000 employees and nearly 2,270 stores nationwide.
Elke sells a wide range of products
The plaintiffs argued that the merger of Kroger and Albertsons would combine two expansionist entities. They said they are different from other stores that sell groceries because they have a wide variety of groceries, unlike gourmet or natural grocers like Whole Foods, limited selection stores like Aldi and Trader Joe’s, department store club stores like Costco or dollar stores.
Supermarkets also compare their prices with other supermarkets and use promotional prices in ways that other supermarkets do not, the plaintiffs argued. And court filings showed Albertsons stores lose more sales when nearby Kroger stores open, while a strike that closed King Soopers stores in Colorado for more than a week in 2022 resulted in soaring sales at nearby Safeway stores – evidence that the supermarket giants compete more with each other than with other types of food retailers.
Lawyers for Kroger and Albertsons argued in response that other retailers, including Amazon, Walmart, Costco and Aldi, are competing with them and that customers are visiting a variety of stores rather than doing one-stop shopping. Nelson wrote that doesn’t mean the stores are meeting the same needs.
“It is not surprising that consumers spend money at different types of retailers, but this does not necessarily demonstrate that those retailers are reasonably interchangeable substitutes for a consumer’s specific needs,” she wrote. “For example, the fact that a customer may go to Costco monthly to stock up on a smaller number of bulk purchases does not make a ‘Costco run’ a reasonable alternative to a weekly one-stop visit to a grocery store to make purchases. most or all of the groceries for the week.”
Oregon Attorney General Ellen Rosenblum said in a statement that Nelson’s ruling in the Oregon case affirmed the state’s arguments that the proposed merger would harm workers and consumers.
“At a time when higher grocery and pharmacy prices are hurting countless households, today’s decision is a win for Oregonians and a win for market competition,” Rosenblum said.
Other states involved
Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico and Wyoming joined the Oregon lawsuit along with the Federal Trade Commission. Arizona Attorney General Kris Mayes described the decision as a victory for consumers, workers and small businesses across the country.
“Had this merger gone through, it could have harmed families by limiting choice, driving up prices and eliminating jobs,” Mayes said. “Here in Arizona, where countless communities depend on accessible, affordable groceries, this decision helps ensure that residents do not have to deal with the potentially devastating consequences of such consolidation.”
Spokespeople for Kroger and Albertsons said the companies were disappointed and were reviewing their options.
“Kroger is disappointed in the opinions of the U.S. District Court for the District of Oregon and the Washington State Court, which ignore the substantial evidence presented at trial showing that a merger between Kroger and Albertsons would undermine the decades-long commitment of the company to lower interest rates. prices, subject to collective bargaining agreements and is in the best interests of customers, associates and the broader competitive environment in a rapidly evolving grocery landscape,” Kroger’s statement said.
Washington’s attorney general and Governor-elect Bob Ferguson praised the judge’s decision in the Washington state case, saying it was a victory for affordability, worker protections and the rule of law.
“We oppose mega-monopolies to keep prices low,” Ferguson said. “We went to court to block this illegal merger, to protect Washingtonians’ struggle with high food prices and the workers whose jobs were at stake.”
This article was first published by the Oregon Capital Chronicle, part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Oregon Capital Chronicle maintains editorial independence. If you have any questions, please contact editor Lynne Terry: info@oregoncapitalchronicle.com.
