Federal, state judges block Kroger-Albertsons supermarket merger

Judges in Oregon and Washington on Tuesday blocked supermarket giants Kroger and Albertsons from merging, throwing into question the future of the largest proposed grocery merger in U.S. history.

U.S. District Court Judge Adrienne Nelson in Portland temporarily halted the merger, writing in a 71-page ruling in a lawsuit that it would lead to undue market concentration, reduce competition, and hurt customers. Her preliminary injunction pauses the $24.6 billion proposed merger while the Federal Trade Commission’s administrative judge continues its review of implications.

Nevada as well as Arizona, California, the District of Columbia, Illinois, Maryland, New Mexico and Wyoming joined the Oregon lawsuit, along with the Federal Trade Commission.

“Nevadans made their concerns known regarding this merger, and we listened,” Nevada Attorney General Aaron Ford said at the time, referring to a series of public listening sessions his office held prior to joining the suit. “This merger would create an anticompetitive marketplace, raise prices on everyday Nevadans and harm grocery store employees,” Ford said in February.

Ford’s office did not respond to requests for comment Tuesday.

King County Superior Court ??Judge Marshall Ferguson in Seattle also ruled that the merger could not move forward in Washington in a separate state case, saying that the proposed merger violated state antitrust laws. Another state lawsuit is pending in Colorado.

The rulings mean Kroger’s 2022 proposal to buy Albertsons is on hold while the companies decide whether to proceed. If they do, an in-house administrative judge at the Federal Trade Commission will determine whether the merger is anticompetitive, though a Kroger lawsuit seeks to block that review.

The FTC, joined by the several states, sued in February to block the merger, saying it would eliminate competition, drive up costs and lead to lower-quality products and services. Henry Liu, director of the FTC’s Bureau of Competition, said in a statement that Tuesday’s ruling will protect Americans who buy groceries and work at grocery stores.

“This historic win protects millions of Americans across the country from higher prices for essential groceries — from milk, to bread, to eggs — ultimately allowing consumers to keep more money in their pockets,” Liu said. “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 Vons in Southern California, or a Jewel-Osco in Illinois.”

Kroger operates about 2,700 stores across 35 states and the District of Columbia. Its stores have different brands throughout the country, including Fred Meyer in the northwest, King Soopers in the Rocky Mountains, Fry’s in Arizona, Harris Teeter in the southeast, and Smith’s in Nevada and the Rocky Mountains. About 430,000 people work for Kroger, according to court filings, and it’s the largest employer of union grocery workers.

Albertsons, which merged with Safeway in 2015, is the nation’s second-largest grocery chain with about 285,000 employees and nearly 2,270 stores across the country.

Spokespeople for Kroger and Albertsons said the companies were disappointed and reviewing their options.

“Kroger is disappointed in the opinions issued by the U.S. District Court for the District of Oregon and the Washington State Court, which overlook the substantial evidence presented at trial showing that a merger between Kroger and Albertsons would advance the company’s decades-long commitment to lowering prices, respecting collective bargaining agreements and is in the best interests of customers, associates and the broader competitive environment in a rapidly evolving grocery landscape,” the Kroger statement said.

A version of this story was originally published in Oregon Capital Chronicle.