Kroger-Albertsons Merger Blocked By Federal Judge

A federal judge in Oregon has blocked the megamerger of grocery giants Kroger and Albertsons from moving forward, delivering a win for antitrust hawks and the Federal Trade Commission.

U.S. District Court Judge Adrienne Nelson issued an order Tuesday granting a preliminary injunction to halt the $25 billion deal. Nelson found that the FTC and several state attorneys general were likely to prevail in their argument that the merger violates antitrust law.

The ruling does not kill the deal outright and can be appealed. But it marks a major setback for Kroger and Albertsons, which are facing two other legal challenges to their merger.

The FTC claims that combining the two companies — each of which owns thousands of grocery stores around the country — would raise prices for customers and push down wages for workers.

As part of the merger, Kroger and Albertsons proposed divesting hundreds of stores to a company called C&S Wholesale Grocers in order to maintain a competitive market. But Nelson said that plan fell short.

“There is ample evidence that the divestiture is not sufficient in scale to adequately compete with the merged firm and is structured in a way that will significantly disadvantage C&S as a competitor,” she wrote.

Douglas Farrar, a spokesperson for the FTC, said in an email that Nelson’s ruling “protects competition” and will “prevent prices from rising even more.”

“This statement win makes it clear that strong, reality-based antitrust enforcement delivers real results for consumers, workers and small businesses,” Farrar said.

The FTC had voted 3-0 in favor of pursuing its complaint against Kroger and Albertsons earlier this year. The agency is chaired by Lina Khan, the progressive antitrust regulator installed by President Joe Biden.

Kroger and Albertsons have maintained that putting the two companies under one roof would lead to lower prices for customers and wouldn’t depress wages. But they received strong pushback from consumer groups, politicians and labor unions that represent grocery store workers.

Colorado’s attorney general filed a separate lawsuit against Kroger and Albertsons in February, alleging that the two companies colluded to weaken workers’ leverage during contract talks. The lawsuit cited a purported email from an Albertsons executive telling a counterpart at Kroger that his company would not poach Kroger employees while they were on strike.