FTC lawyers want judge to block Kroger, Albertsons merger

During closing arguments Tuesday in the Kroger, Albertsons federal merger trial in Portland, Ore., attorneys for the Federal Trade Commission asked a U.S. District Court judge to block the deal, according to reports.

During the final day of the trial, FTC lawyers asked U.S. District Judge Adrienne Nelson to issue a preliminary injunction that would pause the merger while an in-house administrative law judge reviewed the complaint.

The FTC said it believes the merger would indeed lead to higher food prices in an already troubled economy still grappling with inflation. The agency contends that Kroger and Albertsons compete with one another (and not the likes of Amazon or Costco) and that removing that competition would ultimately be harmful for the consumer.

Lawyers for the FTC went as far as to say that grocery competition in local communities would be completely eliminated if the merger goes through.

“The proposed mega-merger of Kroger and Albertsons has been a bad idea since before it was announced publicly nearly two years ago,” UFCW Locals Stop the Merger Coalition said in a press release Tuesday. “Evidence that came out during the trial only elevated the level of concern from unions and the public at large about the looming harm that would be caused if the merger goes through, as well as increased the level of distrust of the CEOs and other executives running the companies.”

Kroger’s stock price was down over 2% at the end of trading on Tuesday.

During the three-week trial, executives for Kroger and Albertsons pushed the narrative that a merger between the two — which would cost $24.6 billion — would bring prices down and increase competition.

Kroger CEO Rodney McMullen and Albertsons’ CEO Vivek Sankaran took the stand on Sept. 5, and both faced intense questioning.

Early on in the trial, FTC Deputy Chief Trial Counsel Susan Musser challenged McMullen on claims that the two grocery chains are not head-to-head competitors and that Kroger is focused on competition from larger retail operations like Walmart, Costco, and Amazon, according to reporting from The Cincinnati Enquirer.

Having both Kroger and Albertsons as separate entities in the marketplace creates healthy competition, Musser added.

During the trial, McMullen was also asked about Kroger’s promise to not close any stores if the merger deal is approved and the Kroger CEO said some closures could happen if the merger becomes official, hence reducing competition in some areas.

Albertsons executive Susan Morris, who will lead C&S Wholesale Grocers if the merger goes through, was also questioned during the trial. Kroger and Albertsons have agreed to sell 579 locations to C&S as part of the deal, and Morris has said her intent is to create a network of stores unique to what shoppers experience at a Kroger or Albertsons.

The FTC trial was the beginning of a series of trials  lobbying against the Kroger, Albertsons merger. A trial for a lawsuit brought by the state of Washington began Monday, and Colorado will start its trial against the merger on Sept. 30.

If Judge Nelson agrees to issue the injunction, the FTC plans to hold the in-house hearings starting Oct. 1. Kroger sued the FTC last month, however, alleging the agency’s internal proceedings are unconstitutional and saying it wants the merger’s merits decided in federal court. That lawsuit was filed in federal court in Ohio.