Current:Home > Contact-usKroger and Albertsons hope to merge but must face a skeptical US government in court first-DB Wealth Institute B2 Expert Reviews
Kroger and Albertsons hope to merge but must face a skeptical US government in court first
View Date:2024-12-23 23:11:58
The largest proposed grocery store merger in U.S. history is going to court.
On one side are supermarket chains Kroger and Albertsons, which say their planned merger will help them compete against rivals like Costco. On the other side are antitrust regulators from the Federal Trade Commission, who say the merger would eliminate competition and raise grocery prices in a time of already high food price inflation.
Starting Monday, a federal district court judge in Portland, Oregon, will consider both sides and decide whether to grant the FTC’s request for a preliminary injunction. An injunction would delay the merger while the FTC conducts an in-house case against the deal before an administrative law judge.
Kroger, based in Cincinnati, Ohio, operates 2,800 stores in 35 states, including brands like Ralphs, Smith’s and Harris Teeter. Albertsons, based in Boise, Idaho, operates 2,273 stores in 34 states, including brands like Safeway, Jewel Osco and Shaw’s. Together, the companies employ around 710,000 people.
Here’s what to know ahead of the hearing, which is expected to last until Sept. 13.
Why do Kroger and Albertsons want to merge?
Kroger and Albertsons – two of the largest grocery chains in the U.S. – announced in October 2022 that they planned to merge. The companies say the $24.6 billion deal would hold down prices by giving them more leverage with suppliers and allowing them to combine their store brands. They say a merger also would help them compete with big rivals like Walmart, which now controls around 22% of U.S. grocery sales. Combined, Kroger and Albertsons would control around 13%.
Why does the FTC want to block the merger?
Antitrust regulators say the proposed merger would eliminate competition, leading to higher prices, poorer quality and lower wages and benefits for workers. In February, the FTC issued a complaint seeking to block the merger before an administrative judge at the FTC. At the same time, the FTC filed the lawsuit in federal court in Oregon seeking the preliminary injunction. The attorneys general of California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming all joined the federal lawsuit.
Will Kroger and Albertsons close some stores if they merge?
They say no. If the merger is approved, Kroger and Albertsons have agreed to sell 579 stores in places where their stores overlap. The buyer would be C&S Wholesale Grocers, a New Hampshire-based supplier to independent supermarkets that also owns the Grand Union and Piggly Wiggly store brands. Kroger and Albertsons initially planned to divest 413 stores, but the FTC said that plan would not have allowed C&S to be a robust competitor. Kroger and Albertsons agreed to divest additional stores in April. Washington has the most stores that would be divested, with 124, followed by Colorado with 91 and California with 63.
What happens if the Oregon judge issues a preliminary injunction?
If the preliminary injunction is approved, Kroger and Albertsons would likely appeal to a higher court, said Mike Keeley, a partner and antitrust chair at Axinn, Veltrop & Harkrider, a Washington law firm. The case could then move through the FTC’s own judicial system, but since that can take a year or more, companies often abandon a deal before going through the process, Keeley said. Kroger sued the FTC this month, alleging the agency’s internal proceedings are unconstitutional and saying it wants the merger’s merits decided in federal court. In that case, filed in Ohio, Kroger cited a recent Supreme Court ruling that limited the power of the Securities and Exchange Commission to try some civil fraud complaints within the agency instead of in court.
What happens if the Oregon judge agrees with Kroger and Albertsons?
The FTC would likely appeal the ruling, but Keeley said it’s rare for an appeals court to reverse a lower court’s ruling on a merger, so the FTC might decide to drop the challenge. The case could still proceed through the FTC’s administrative process. It’s unclear what impact the presidential election could have on the case. The Biden administration has been particularly aggressive in challenging mergers that it considered anti-competitive, but lawmakers from both parties expressed skepticism about the merger in a 2022 hearing.
If the federal court lets the merger proceed, could state courts still prevent it?
Colorado and Washington have separately sued to block the merger in state courts. That’s an unusual situation; normally states are co-plaintiffs in a federal lawsuit. But both states believe they have a lot at stake. Colorado has more than 200 Kroger and Albertsons stores, while Washington has more than 300. Keeley said both states could seek their own injunctions from a different court if the FTC loses, but it would be surprising for another court to block the merger if Kroger and Albertsons are successful in the federal case.
veryGood! (4)
Related
- Democrat Janelle Bynum flips Oregon’s 5th District, will be state’s first Black member of Congress
- ‘Art and science:' How bracketologists are using artificial intelligence this March Madness
- Idaho considers a ban on using public funds or facilities for gender-affirming care
- Usher, Fantasia Barrino, ‘Color Purple’ honored at 55th NAACP Image Awards
- In bizarro world, Tennessee plays better defense, and Georgia's Kirby Smart comes unglued
- Years after her stepdad shot her in the face, Michigan woman gets a new nose
- Several Black museums have opened in recent years with more coming soon. Here's a list.
- Russia polling stations vandalized as election sure to grant Vladimir Putin a new 6-year term begins
- University of Illinois Urbana-Champaign chancellor to step down at end of academic year
- NASCAR Bristol race March 2024: Start time, TV, streaming, lineup for Food City 500
Ranking
- Quincy Jones' cause of death revealed: Reports
- Undeterred: Kansas Citians turn for St. Patrick’s Day parade, month after violence at Chiefs’ rally
- 7th Heaven Stars Have a Heartwarming Cast Reunion at '90s Con
- Stock market today: Asian stocks gain ahead of US and Japan rate decisions
- Stop What You're Doing—Moo Deng Just Dropped Her First Single
- U.S. government charter flight to evacuate Americans from Haiti, as hunger soars: There are a lot of desperate people
- Blake Lively appears to take aim at Princess Kate's photo editing drama: 'I've been MIA'
- South Carolina and Iowa top seeds in the women’s NCAA Tournament
Recommendation
-
Vermont man is fit to stand trial over shooting of 3 Palestinian college students
-
1 dead, 5 injured in Indianapolis bar shooting; police search for suspects
-
Several Black museums have opened in recent years with more coming soon. Here's a list.
-
In the ‘Armpit of the Universe,’ a Window Into the Persistent Inequities of Environmental Policy
-
Vogue Model Dynus Saxon Charged With Murder After Stabbing Attack
-
Netanyahu snaps back against growing US criticism after being accused of losing his way on Gaza
-
See the full list of nominees for the 2024 CMT Music Awards
-
Al Gore talks 'Climate Reality,' regrets and hopes for the grandkids.