A US judge blocked the pending $25bn merger of US grocery chains Kroger and Albertsons on Tuesday, siding with the Federal Trade Commission (FTC) in a win for the Biden administration.
The FTC argued at 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 leverage for unionized workers.
Kroger fought those claims, saying the deal would bring prices down, particularly at Albertsons stores, where it said prices are 10-12% higher than at Kroger stores. The merged company would fund price cuts through cost savings it expects from a larger operation, and a larger customer base to drive revenue for Kroger’s data consulting business, Kroger said.
Kroger and Albertsons had also tried to convince US district judge Adrienne Nelson that selling off 579 of the stores, particularly in western US states where Kroger and Albertsons are located near each other, would preserve competition.
Grocery workers’ unions criticized the merger, saying it would likely 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 on their own.
Nelson’s ruling essentially scuttles the merger, Kroger has said in court documents. Had the deal proceeded, Kroger would own approximately 5,000 stores across the US. The companies argued at trial that they needed to merge to compete with global conglomerates such as Walmart and Amazon.com.