A federal judge on Tuesday temporarily blocked Kroger’s $24.6 billion takeover of Albertsons, ruling that the proposed union would reduce competition for shoppers.
The preliminary orders from an Oregon court favored the Federal Trade Commission, which had argued the deal would violate antitrust law.
The judge’s ruling effectively ends the likelihood of a deal happening, said Neil Saunders, managing director of GlobalData. “Of all the cases the FTC has litigated in recent years, this one was the most sensitive because it involved two major companies that provided essential goods,” the retail analyst added.
The FTC in February sued for the proposed merger, with the agency joined in its lawsuit by eight attorneys general and the District of Columbia.
“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,” said Henry Liu, director of the agency’s Bureau of Competition. said in a statement. “This victory will have a direct, tangible impact on the lives of millions of Americans who shop at Kroger or Albertsons grocery stores for their daily needs, whether it’s a Fry’s in Arizona, a Von’s in Southern California or a Jewel-Osco in Illinois . .”
Companies defends deal
Based in Cincinnati, Ohio, Kroger operates 2,750 stores in 35 states and the District of Columbia, including brands such as Ralphs, Smith’s and Harris Teeter. Based in Boise, Idaho, Albertsons operates approximately 2,300 stores in 34 states, including brands such as Safeway, Jewel Osco and Shaw’s. Together the companies employ approximately 700,000 people.
The retailers agreed to join forces in October 2022, arguing the union would help them compete with Amazon, Costco, Walmart and other larger rivals.
Albertsons expressed disappointment in Tuesday’s judge ruling halting the deal and said the company is exploring its legal and strategic options.
“We believe we have clearly outlined throughout the process how the proposed merger would increase competition, lower prices, increase employee wages, protect union jobs and improve customers’ shopping experience,” it said company 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 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 could undermine the decades-long the company’s commitment to lowering interest rates. prices, while respecting collective bargaining agreements, and is in the best interests of customers, employees and the broader competitive environment in a rapidly evolving supermarket landscape.”
Kroger has pledged to invest $500 million in lower prices once the deal is completed. It also said it invested in price reductions 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 supermarket merger in U.S. history, said it would also erase competition for workers, jeopardizing their ability to secure higher wages, better benefits and better working conditions .
