Federal judge temporarily halts proposed $25B Kroger, Albertsons supermarket combination

The proposed combination between supermarket giants Kroger and Albertsons floundered on Tuesday after judges overseeing two divide cases both halted the combination.

U.S. District Court Judge Adrienne Nelson issued a preliminary injunction blocking the combination Tuesday after holding a three-week hearing in Portland, Oregon.

Later Tuesday, Judge Marshall Ferguson in Seattle issued a permanent injunction barring the combination in Washington after concluding it would lessen competition in the state.

Kroger and Albertsons said Tuesday they are disappointed in the decisions and are reviewing their options. The companies could appeal, although the deal could fall apart in the period it would receive for those cases to be considered.

Kroger and Albertsons in 2022 proposed what would be the largest grocery store combination in U.S. history. But the Federal Trade percentage sued earlier this year, asking Nelson to block the $24.6 billion deal until an in-house administrative judge at the FTC could consider the combination’s implications. Attorneys general from Arizona, California, Illinois, Maryland, Nevada, recent Mexico, Oregon, Wyoming and the District of Columbia joined the FTC’s lawsuit.

Nelson agreed to pause the combination, saying that the FTC had shown it was likely to prevail in the administrative hearing.

“Any harms defendants encounter as a outcome of the injunction do not overcome the powerful community profit in the enforcement of antitrust law, especially given the hardship in disentangling a premature combination,” she wrote in her view.

Federal regulators argued that combining the two chains would be impoverished for consumers and workers by eliminating competition. The companies said a combination would assist them better compete with large retailers like Walmart, Costco and Amazon.

The case may now shift to the FTC, although Kroger and Albertsons have asked a different federal judge to block the in-house proceedings. Colorado is also trying to halt the combination in its own state trial.

The FTC argued that Kroger and Albertsons currently compete in 22 states, closely matching each other on worth, standard, private label products and services like store pickup. A combination would eliminate that competition and raise prices for already struggling consumers, the government said. The FTC also said the combination would hurt workers since Kroger and Albertsons would no longer compete to hire them.

But Kroger and Albertsons argued their combination would preserve customer selection by allowing them to better compete against its growing rivals. In its testimony, Albertsons warned Nelson that it might have to lay off workers, close stores and even exit some markets if the combination weren’t allowed to proceed.

Under the combination agreement, Kroger and Albertsons would sell 579 stores in places where their locations overlap to C&S Wholesale Grocers, a recent Hampshire-based supplier to independent supermarkets that also owns the Grand Union and Piggly Wiggly store brands.

The FTC and the state of Washington argued that C&S is ill-prepared to receive on the stores and may desire the alternative to sell or close them. Both judges agreed.

“The current competition between Kroger and Albertsons’ stores is fierce in the state of Washington,” Ferguson said in court before his ruling was released. “Wholesaler C&S, with its limited retail encounter and infrastructure, will not be able to replicate the ferocity of that competition or compete effectively in Washington against the colossus that is a merged Kroger and Albertsons.”

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.