The largest proposed grocery store merger in U.S. history is going to court.
On one side are supermarket chains Kroger and Albertsons, which say their planned merger will help them compete against rivals like Costco. On the other side are antitrust regulators from the Federal Trade Commission, who say the merger would eliminate competition and raise grocery prices in a time of already high food price inflation.
Starting Monday, a federal district court judge in Portland, Oregon, will consider both sides and decide whether to grant the FTC’s request for a preliminary injunction. An injunction would delay the merger while the FTC conducts an in-house case against the deal before an administrative law judge.
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.
Here’s what to know ahead of the hearing, which is expected to last until Sept. 13.
Kroger and Albertsons defend merger plan in federal court against US regulators’ objections
Why do Kroger and Albertsons want to merge?
Kroger and Albertsons – two of the largest grocery chains in the U.S. – announced in October 2022 that they planned to merge. The companies say the $24.6 billion deal would hold down prices by giving them more leverage with suppliers and allowing them to combine their store brands. They say a merger also would help them compete with big rivals like Walmart, which now controls around 22% of U.S. grocery sales. Combined, Kroger and Albertsons would control around 13%.
Why does the FTC want to block the merger?
Antitrust regulators say the proposed merger would eliminate competition, leading to higher prices, poorer quality and lower wages and benefits for workers. In February, the FTC issued a complaint seeking to block the merger before an administrative judge at the FTC. At the same time, the FTC filed the lawsuit in federal court in Oregon seeking the preliminary injunction. The attorneys general of Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming all joined the federal lawsuit.
Will Kroger and Albertsons close some stores if they merge?
They say no. If the merger is approved, Kroger and Albertsons have agreed to sell 579 stores in places where their stores overlap. The buyer would be C&S Wholesale Grocers, a New Hampshire-based supplier to independent supermarkets that also owns the Grand Union and Piggly Wiggly store brands. Kroger and Albertsons initially planned to divest 413 stores, but the FTC said that plan would not have allowed C&S to be a robust competitor. Kroger and Albertsons agreed to divest additional stores in April. Washington has the most stores that would be divested, with 124, followed by Colorado with 91 and California with 63.
What happens if the Oregon judge issues a preliminary injunction?
If the preliminary injunction is approved, Kroger and Albertsons would likely appeal to a higher court, said Mike Keeley, a partner and antitrust chair at Axinn, Veltrop & Harkrider, a Washington law firm. The case could then move through the FTC’s own judicial system, but since that can take a year or more, companies often abandon a deal before going through the process, Keeley said. Kroger sued the FTC this month, alleging the agency’s internal proceedings are unconstitutional and saying it wants the merger’s merits decided in federal court. In that case, filed in Ohio, Kroger cited a recent Supreme Court ruling that limited the power of the Securities and Exchange Commission to try some civil fraud complaints within the agency instead of in court.
What happens if the Oregon judge agrees with Kroger and Albertsons?
The FTC would likely appeal the ruling, but Keeley said it’s rare for an appeals court to reverse a lower court’s ruling on a merger, so the FTC might decide to drop the challenge. The case could still proceed through the FTC’s administrative process. It’s unclear what impact the presidential election could have on the case. The Biden administration has been particularly aggressive in challenging mergers that it considered anti-competitive, but lawmakers from both parties expressed skepticism about the merger in a 2022 hearing.
If the federal court lets the merger proceed, could state courts still prevent it?
Colorado and Washington have separately sued to block the merger in state courts. That’s an unusual situation; normally states are co-plaintiffs in a federal lawsuit. But both states believe they have a lot at stake. Colorado has more than 200 Kroger and Albertsons stores, while Washington has more than 300. Keeley said both states could seek their own injunctions from a different court if the FTC loses, but it would be surprising for another court to block the merger if Kroger and Albertsons are successful in the federal case.
FAQs
Kroger and Albertsons hope to merge but must face a skeptical US government in court first. The largest proposed grocery store merger in U.S. history is going to court. On one side are supermarket chains Kroger and Albertsons, which say their planned merger will help them compete against rivals like Costco.
Will the Albertsons Kroger merger go through? ›
Did the FTC block the Kroger Albertsons merger? Yes; the Federal Trade Commission has temporarily blocked the merger by filing a lawsuit on Feb. 26, 2024.
What factors are driving Kroger to merge with Albertsons? ›
Kroger and Albertsons agreed to merge in October 2022. The companies said a merger would help them better compete with big retailers like Walmart, Costco and Amazon, which owns Whole Foods, because they would have more power to negotiate prices and could save on distribution and administrative costs.
Who is Kroger getting ready to merge with? ›
Kroger's merger with Albertsons will allow it to attract and retain more customers by lowering prices, creating a more seamless and personalized experience and expanding its selection of fresh, affordable food.
Is Kroger buying Albertsons and Tom Thumb? ›
As part of a proposed $25 billion merger, grocery giants Kroger and Albertsons plan to sell hundreds of locations nationwide, including 26 in North Texas and two in South Texas. They also plan to sell a handful of distribution centers. The locations include Tom Thumb, Albertsons, Market Street and Randalls stores.
What is Fred Meyer strike about? ›
UFCW 555 has called for an “Unfair Labor Practices” strike based on Fred Meyer's repeated failure to share legally required information needed for current negotiations and the company's refusal to process grievances.
What grocery chain did Kroger merge with? ›
The FTC filed its lawsuit in February of this year. The merger was announced in October, 2022. Kroger will buy Albertsons for $20 billion, which is a per share price of $34.10 and will also take on $4.7 billion of Albertsons debt.
What happens to Albertsons if the merger fails? ›
Albertsons break-up consolation prize if merger fails
If KR loses the court case or gives up, it will have to pay ACI $600 million per the terms of the contract. This represents just over $1.00 per ACI share. This would sum with ACI's value as an independent company.
What are the benefits of Kroger and Albertsons merger? ›
Allowing Kroger and Albertsons to merge would curtail grocery industry competition, giving the combined entity more market power at a time food store prices remain elevated, according to the FTC.
Who is bigger, Kroger or Albertsons? ›
Kroger, the biggest U.S. supermarket operator with 2,719 locations, owns Ralphs, Harris Teeter, Fred Meyer and King Soopers. Albertsons, the second-largest chain with 2,272 stores, owns Safeway and Vons. Kroger employs about 430,000 people; Albertsons 290,000.
The current plan is for Kroger to buy all 135 Albertsons/Safeway properties, then sell 101 of them to C&S Wholesale Grocers, a company that operates Piggly Wiggly supermarkets and other stores, primarily in Wisconsin, Georgia, the Carolinas and other states back east.
Has the FTC sued to block the Kroger Albertsons merger? ›
The Federal Trade Commission sued to block the deal, claiming it would reduce competition in an already shrinking grocery market. "The SupermarketGuru" Phil Lempert joins "NewsNation Now" to discuss how a merger would affect consumers and how the two companies are attempting to defend their deal.
Who owns Kroger grocery chain? ›
Who owns Kroger? Though it was founded by Bernard Kroger in 1883, Kroger is currently owned by CEO and Chairman Rodney McMullen. McMullen literally started as a stock clerk at a Kentucky Kroger location and worked his way up.
Why is Kroger trying to buy Albertsons? ›
Our proposed merger with Albertsons will bring lower prices and more choices to more customers and secure the long-term future of unionized grocery jobs." The proposed merger will create meaningful and measurable benefits for America's consumers, Kroger and Albertsons Cos.
Is Kroger the same as target? ›
While Walmart and Target are discount department stores that have branched out into food items (even to the point, in Walmart's case, of opening smaller “market” stores that focus on groceries), Kroger is a chain of large supermarkets that now sells some clothes, housewares, and seasonal items that you might otherwise ...
What store names are Kroger owned? ›
The Kroger Co. operates grocery retail stores under the following banners: Supermarkets – Kroger, Ralphs, Dillons, Smith's, King Soopers, Fry's, QFC, City Market, Owen's, Jay C, Pay Less, Baker's, Gerbes, Harris Teeter, Pick 'n Save, Metro Market, Mariano's. Multi-department stores – Fred Meyer.
What arguments are the grocery store chains using to justify their merger? ›
Kroger and Albertsons have attempted to justify the merger by arguing that it is necessary to compete with big box stores like Walmart and Costco. They claim that the merger would lead to lower prices for consumers at Albertsons stores, where prices are currently 10-12% higher than at Kroger stores.
Is Kroger Albertsons merger a monopoly? ›
Kroger, Albertsons is not close to being a 'grocery monopoly' | Supermarket News. In the past 20 years, the top four supermarket grocers – Kroger, Ahold Delhaize, Albertsons and Publix – have lost ~15% share, and there are still no national supermarket grocers.
What is Albertsons strategy? ›
CEO Vivek Sankaran attributed Albertson's growth to its “customers for life” strategy, which emphasizes deeper relationships with customers no matter where they shop. Albertsons' ultimate goal for the strategy is to support its shoppers every day and every week for their lives, according to Sankaran.
What is the premium for Kroger Albertsons merger? ›
In October 2022, Kroger agreed to buy Albertsons for $34.10 per share, valuing the deal at $24.6 billion. The acquisition aims to enhance Kroger's competitive edge by expanding its market presence and leveraging economies of scale to offer better prices and services to customers.
