U.S. court blocks Kroger-Albertsons merger
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A federal court on Tuesday issued a preliminary injunction against the proposed merger of grocery giants Kroger and Albertsons, siding with the Biden administration.
Why it matters: The ruling, according to Kroger's own assertion, is certain to doom the merger.
Catch up quick: The $25 billion deal would have merged the country's second and fourth largest grocers by market share, with Kroger trailing only Walmart and Albertsons sitting behind Costco.
- Combined, the two companies would have employed more than 710,000 workers and operate nearly 5,000 stores, almost 4,000 pharmacies and over 2,000 fuel centers. Albertsons brands include Safeway and Acme.
- The FTC sued to block the deal in February, and it also faced challenges from several state attorneys general.
What we're watching: Albertsons may find itself back on the auction block.
- A lawyer representing Albertsons previously said the company might have to pursue layoffs, close stores and exit entire markets.
- "And if somehow Albertsons does not succeed at those kinds of measures, the likelihood is it is a candidate for a sale to somebody else," she added.
The intrigue: "An FTC win could also establish precedent for labor market claims," says Cooley partner and former DOJ antitrust attorney Kathy O'Neill.
- "According to the FTC, unions have played these supermarket chains off one another to improve employee pay and benefits in the past," she says.
- She adds that excluding superstores from the market definition of grocers also could invite other forms of consolidation.
What they're saying: Both Kroger and Albertsons said in statements they are disappointed by the decision and that they are reviewing their options.
- Kroger reiterated that it would have invested several billion dollars in lowering grocery prices, increasing wages and improving Albertsons stores.
- The FTC's Bureau of Competition Director Henry Liu said in a statement that the agency "scored a major victory" with the ruling, which it said not only protects consumers, but also union employees.
The bottom line: This is a huge win for FTC chair Lina Khan and the Biden administration's antitrust efforts, blocking a megamerger that the government argued could raise grocery prices and lower worker pay.
Editor's note: This story has been updated to include comments from the FTC, Kroger and Albertsons.
Go deeper: Washington state judge blocks Kroger-Albertsons merger
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