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FTC and Kroger-Albertsons head for August showdown

Illustration of a giant hand crushing a small bag of groceries

Illustration: Sarah Grillo/Axios

The Federal Trade Commission will begin its case for a preliminary injunction to block Kroger's $24.6 billion acquisition of Albertsons on Aug. 26 in Portland, Oregon.

Why it matters: The timing delays a potential deal close to the second half of the year.

The big picture: A decision will have a far-ranging impact on food retail's competitive landscape for the coming decades.

Zoom in: The date was set by U.S. District Judge Adrienne Nelson, who instructed each side to file a proposed briefing schedule by this Friday, per Reuters.

Catch up quick: The FTC sued last month to block a merger that would boost Kroger's position as the second-largest food retailer behind Walmart.

What's next: The August date gives each side adequate time to prepare, former FTC policy director David Balto tells Axios.

  • A trial typically takes between one and two weeks while a decision could take up to a month, he says.
  • Kroger and Albertsons would likely get an answer before Oct. 9, which is the date to which both sides can extend the merger agreement, Balto says.

Between the lines: In Portland, the FTC picked an ideal venue for the case, given it's a market where Kroger and Albertsons go head to head — something the judge will have experienced herself, Balto says.

What they're saying: For Kroger, the fight to acquire Albertsons is its "Hundred Years' War," Balto says.

  • "This is the deal they need to become the competitor they want to be," he adds.

The intrigue: The courts are increasingly showing skepticism about large-scale mergers, Balto says, citing JetBlue's failed attempt to acquire Spirit Airlines.

  • The FTC has a compelling case and can show that these mergers lead to higher prices, he says.
  • The agency can also show that remedies similar to the one Kroger is proposing, which divests stores to C&S Wholesale, have frequently failed, Balto says.

The other side: Kroger's CEO Rodney McMullen reiterated during last week's earnings call that his company is committed to the merger and will defend it in court.

  • An Albertson spokesperson directed Axios toward its and Kroger's public defenses of the deal, which say the FTC is ignoring "the commercial realities of the fiercely competitive modern grocery landscape," by placing the merger within the narrowly defined category of traditional supermarkets.
  • They say the FTC omits competition from Walmart, Target, Costco, Amazon and Whole Foods, and other specialty retailers like Trader Joe's and Sprouts.
  • They also said the FTC ignores the impact of the divestitures to C&S.

The FTC declined to comment. Kroger did not respond to Axios' request for comment.

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