Federal judge blocks Kroger’s $25 billion mega-merger with Albertsons

new York
CNN
—

A federal judge in Oregon blocked Kroger’s planned $25 billion merger with Albertsons, ruling that the deal would limit competition in the grocery industry and harm consumers.

The merger, announced in 2022, aimed to unite the country’s fifth and tenth largest retailers. The companies include dozens of grocery chains, including Safeway, Vons, Harris Teeter and Fred Meyer.

Kroger and Albertsons employ mostly union workers and said they wanted to merge to be more competitive against non-union giants like Walmart, Amazon and Costco. The pressure on grocers is also increasing from Aldi, the fast-growing German discount supermarket chain.

The merger would “strengthen our position as a more attractive alternative to larger and non-union competitors,” Kroger CEO Rodney McMullen said when the deal was announced in 2022. Kroger committed to cutting grocery prices by $1 billion after the merger.

But the proposal came as food prices were soaring. Unions, small grocers and a coalition of Democrats and Republicans on Capitol Hill, including Democratic Sen. Elizabeth Warren of Massachusetts and Republican Sen. Mike Lee of Utah, also strongly opposed the merger from the start.

The Federal Trade Commission filed a lawsuit in February to block the deal.

The FTC said the merger “will result in higher food prices for millions of Americans and lower wages and benefits for hundreds of thousands of grocery workers.”

To address competition concerns, Kroger and Albertsons agreed to sell 579 stores to C&S Wholesale Grocers. But the FTC said C&S was “ill-equipped” to operate the divested businesses and could result in a “malfunctioning disaster.”

The case has been closely watched because of its implications for future antitrust enforcement and the conduct of corporate business. The FTC, under Chairwoman Lina Khan, has also launched groundbreaking antitrust lawsuits against Google, Amazon and other tech giants.

This is a developing story. It will be updated.