A US judge blocked the expected $25 billion merger of US grocery chains Kroger and Albertsons on Tuesday, in a victory for the Biden administration in favor of the US Federal Trade Commission (FTC).
The FTC argued in a three-week trial in Portland, Oregon that the merger would eliminate head-to-head competition between the top two traditional grocery chains, leading to higher prices for shoppers and reduced bargaining power for union workers.
U.S. District Judge Adrienne Nelson agreed in the ruling that the merger would eliminate direct competition between the two grocers, making it illegal.
Albertsons shares were down about 2.2% Tuesday afternoon. Kroger shares rose nearly 5%.
FTC spokesman Douglas Farrar said the ruling “protects competition in the grocery market and will prevent further price increases.”
“This statement victory clearly demonstrates that strong, reality-based antitrust enforcement produces real results for consumers, workers and small businesses,” Farrar said.
Spokesmen for Kroger and Albertsons did not immediately respond to requests for comment.
Kroger has fought the FTC’s allegations, saying the deal would lower prices, especially since prices at Albertsons stores are 10 to 12% higher than at Kroger stores. Kroger said the combined company will finance the price cuts through a broader customer base to generate revenue for Kroger’s data consulting business and cost savings it expects from the larger operation.
If the deal went through, Kroger would have about 5,000 stores in the United States. The companies argued in court that they needed to merge to compete with global conglomerates such as Walmart and Amazon.com.
Kroger and Albertsons also tried to convince Nelson that selling the 579 stores would protect competition, particularly in the western states where Kroger and Albertsons are located close together.
Food worker unions criticized the merger, saying it could lead to job losses, and attorneys general from 10 states and the District of Columbia either joined the FTC’s case or sued to block the merger.
-Jody Godoy and Jasper Ward, Reuters