FTC, States Sue To Block Kroger's $24.6 Bln Albertsons Deal

(RTTNews) - The Federal Trade Commission or FTC along with a group of nine attorneys general have filed a lawsuit to block Kroger Co.'s proposed $24.6 billion acquisition of the Albertsons Companies, Inc., alleging that the deal is anticompetitive.

In the move, FTC alleges that the planned merger, which would be the largest among supermarkets in U.S. history, will eliminate competition and raise grocery prices, while harming thousands of workers.

The group of nine attorneys general joining the FTC's federal court complaint include Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon, and Wyoming.

Meanwhile, Colorado Attorney General in mid February had filed a lawsuit to stop the proposed merger, expressing concerns about potential harm to consumers. A similar lawsuit was filed by Washington state in January.

Kroger operates thousands of stores across 36 states, and Albertsons operates thousands of stores across 35 states. Following a merger, Kroger and Albertsons would operate more than 5,000 stores and around 4,000 retail pharmacies. They would employ nearly 700,000 employees across 48 states.

In the filing, the FTC alleged that the proposed merger, which was announced in 2022, will eliminate fierce competition between Kroger and Albertsons, leading to higher prices for groceries and other essential household items as well as lower quality products and services. It will also narrow consumers' choices for where to shop for groceries.

Further, the proposed acquisition would immediately erase aggressive competition for workers, and will threaten their ability to secure higher wages, better benefits, and improved working conditions.

The agency noted that both Kroger and Albertsons executives have acknowledged that they are direct competitors, forcing each other to aggressively compete for customers by lowering prices and for employees by providing better pay and benefits across the country.

According to FTC, executives for both supermarket chains have conceded that Kroger's acquisition of Albertsons is anticompetitive, with one executive reacting to the proposed deal: "you are basically creating a monopoly in grocery with the merger."

For securing antitrust approval of their merger, Kroger and Albertsons have proposed to divest several hundred stores and select other assets to C&S Wholesale Grocers.

Regarding this, the FTC's administrative complaint alleged that Kroger and Albertsons's inadequate divestiture proposal is a hodgepodge of unconnected stores, banners, brands, and other assets that Kroger's antitrust lawyers have cobbled together. They falls far short of mitigating the lost competition between Kroger and Albertsons.

The FTC says the proposed divestitures are not a standalone business, and that C&S would face significant obstacles combining the various parts and pieces from Kroger and Albertsons into a functioning business.

Henry Liu, Director of the FTC's Bureau of Competition, said, "This supermarket mega merger comes as American consumers have seen the cost of groceries rise steadily over the past few years. Kroger's acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today."

The FTC said the federal court complaint and request for preliminary relief will be filed jointly with the state attorneys general in the U.S. District Court for the District of Oregon.