Grocery giant Kroger’s $25 billion attempt to acquire competitor Albertsons was halted by a U.S. district court in Oregon, who determined that the Federal Trade Commission’s worries about the merger’s effect on market concentration were legitimate.
Judge Adrienne Nelson declared on Tuesday afternoon that customers would suffer if the two businesses merged.
The two businesses “engage in substantial head-to-head competition and the proposed merger would remove that competition,” according to Ferguson’s letter. The planned merger would therefore probably result in consequences that “unilaterally” hurt customers, making it “presumptively unlawful.”
Ferguson further declared that the merger would be detrimental to workers, claiming that workers’ bargaining strength would be diminished by further concentration.
“We are disappointed by the U.S. District Court’s decision to grant the FTC’s request for a preliminary injunction,” Albertsons said in a statement.
“We think we made it very apparent throughout the hearings how the proposed combination will improve the shopping experience for customers, safeguard union jobs, raise associate salaries, cut prices, and promote competition. According to the merger agreement, we are carefully examining the Court’s ruling and weighing our alternatives,” the statement stated.
In addition to expressing regret, a Kroger representative stated that the business “is currently reviewing its options.”
Cincinnati-based Kroger has stated that a court decision such as this one would essentially put a stop to the merger.
The FTC praised the ruling, stating that it “successfully prevented Kroger’s acquisition of Albertsons, marking a significant victory for the American people.”
“This victory has a direct, tangible impact on the lives of millions of Americans who shop at Kroger or Albertsons-owned grocery stores for their everyday needs, whether that’s a Fry’s in Arizona, a Von’s in Southern California, or a Jewel-Osco in Illinois,” the Federal Trade Commission said in a statement.
While shares of Boise, Idaho-based Albertsons ended the day 2% down, Kroger’s stock closed up 5% on Tuesday.
In order to stay competitive with large box stores like Walmart, Target, and Amazon, who have greatly expanded their grocery businesses, Kroger has maintained that the agreement was essential.
However, Nelson stated that the effects of the planned merger must be taken into consideration and that “supermarkets” still constitute a unique, specialized sector within the American consumer landscape.
The decision is a win for the Biden administration, and in particular for FTC Chair Lina Khan, who has challenged mergers that might lead to monopolies with a never-before-seen level of vigor.
