FTC Lawyers Urge Judge to Block Kroger-Albertsons Merger

During the _FTC Lawyers Urge Judge to Block _Kroger-Albertsons Merger trial on Tuesday in Portland, Oregon, attorneys for the Federal Trade Commission (FTC) called on a U.S. District Court judge to halt the $24.6 billion merger between Kroger and Albertsons. As the federal case came to a close, the FTC requested a preliminary injunction to pause the deal while an administrative law judge further reviews the complaint.

The FTC argued that the merger could lead to increased food prices, exacerbating economic pressures in an inflationary environment. According to the FTC, Kroger and Albertsons are direct competitors, not merely facing competition from retail giants like Amazon or Costco. Removing this rivalry, the agency claims, would harm consumers and diminish grocery competition in local communities.

In a press release, the UFCW Locals Stop the Merger Coalition expressed their ongoing concerns, stating, “The proposed mega-merger of Kroger and Albertsons has been a bad idea since before it was announced publicly nearly two years ago.” The union coalition pointed to evidence from the trial that heightened fears of consumer harm and raised skepticism about the motivations of the companies’ executives.

Meanwhile, Kroger’s stock dropped by more than 2% at the end of Tuesday’s trading, reflecting investor uncertainty. Over the course of the three-week trial, Kroger and Albertsons executives argued that the merger would reduce prices and increase competition in the grocery sector.

Kroger CEO Rodney McMullen and Albertsons CEO Vivek Sankaran both testified, facing rigorous questioning. FTC Deputy Chief Trial Counsel Susan Musser challenged McMullen’s assertion that the two companies are not direct competitors, pointing out that they provide essential competition in the grocery marketplace. Musser also emphasized that keeping Kroger and Albertsons as separate entities is crucial for maintaining healthy competition.

McMullen admitted during the trial that while Kroger has promised not to close stores if the merger goes through, some closures could still occur, potentially reducing competition in certain areas. Albertsons executive Susan Morris, who is expected to lead C&S Wholesale Grocers if the merger is approved, was also questioned. As part of the deal, Kroger and Albertsons have agreed to sell 579 stores to C&S, with Morris indicating that she plans to create a unique network of stores distinct from Kroger or Albertsons.

This trial is the first in a series of legal battles over the merger. The state of Washington began its trial against the merger on Monday, and a Colorado trial is set to start on September 30. If U.S. District Judge Adrienne Nelson agrees to the FTC’s request for an injunction, the FTC plans to begin in-house hearings on October 1. However, Kroger has filed a lawsuit against the FTC, arguing that its internal proceedings are unconstitutional, and wants the case decided in federal court in Ohio.