Judge Halts $25 Billion Kroger-Albertsons Merger

Shares of Albertsons Companies Inc. fell by over 4% following a U.S. District Judge's decision to block the proposed $25 billion merger with The Kroger Co. The ruling was a victory for the U.S. Federal Trade Commission (FTC) and the Biden administration, which argued that the merger would reduce competition and potentially raise prices for consumers.

In the case, heard in Portland, Oregon, the FTC contended that the merger between the two largest traditional grocery chains in the country would lead to higher prices and less bargaining power for unionized workers. In contrast, Kroger's stock rose by 4.3%.

Kroger defended the merger, claiming it would lower prices in areas where prices at Albertsons were significantly higher than those at Kroger stores. Kroger anticipated that the merger would generate cost savings from a larger operation and increase revenue from its data consulting business with a broader customer base.

Judge Adrienne Nelson's ruling effectively ends the merger, as Kroger acknowledged in court documents. The merger would have resulted in Kroger owning approximately 5,000 stores nationwide. Both companies argued that the merger was necessary to effectively compete with global corporations like Walmart and Amazon.com.

To address competition concerns, Kroger and Albertsons proposed divesting 579 stores, particularly in western states where the two chains operated in close proximity. However, this concession failed to persuade the judge.

The proposed merger faced opposition from grocery workers' unions, which expressed concerns about potential job losses. Additionally, the attorneys general of 10 states and the District of Columbia either supported the FTC’s case or filed their own legal challenges to block the merger.