FTC Calls for Court to Halt Controversial Kroger-Albertsons Merger

A federal judge in Oregon is considering a pivotal case regarding the proposed merger between Kroger and Albertsons, two of the nation’s largest supermarket chains. This follows sharply contrasting closing arguments presented by attorneys for both sides, marking the conclusion of a hearing that lasted four weeks.

Kroger maintains that the merger would yield immediate benefits for consumers, specifically by lowering prices. However, the Federal Trade Commission (FTC) counters that the merger threatens competition and could negatively impact the workforce. The FTC, supported by nine states, is pursuing a preliminary injunction to halt the merger.

During the proceedings, FTC attorney Susan Musser emphasized the validity of concerns surrounding the merger. “The defendants are wrong on both the facts and the law,” she asserted. Musser argued that Kroger and Albertsons failed to produce sufficient evidence to dispel allegations of anticompetitive behavior. “The plaintiffs have shown the product markets are well defined and this merger causes harm,” she added, reinforcing the case against the merger.

In a rebuttal, Kroger’s attorney Matthew Wolf critiqued the FTC’s characterization of the product market, insisting that the regulatory agency’s claims were not supported by evidence from the extensive hearings. Wolf expressed skepticism about the FTC’s arguments, suggesting they relied on baseless speculation. “The evidence in the record cannot possibly satisfy the high burden in this case,” he stated.

Wolf also argued that the merger is essential for competitiveness, especially against larger rivals like Walmart. “If we don’t do something, the corner grocery store is in real danger,” he warned, adding that the merger would enable Kroger to generate revenue from non-grocery sources, which is vital for maintaining low prices.

The defense also rolled out a commitment of a $1 billion investment to keep grocery prices low. However, Musser was quick to question the enforceability of such promises. “Experience tells us that promises can be broken,” she cautioned, highlighting that corporate executives prioritize shareholder interests over consumer assurances.

Albertsons’ attorney, Enu Mainigi, shared a bleak forecast based on CEO Vivek Sankaran’s testimony, indicating potential layoffs and store closures without the merger. Musser dismissed this as a desperate strategy, stating, “The evidence shows Albertsons is succeeding.”

A key point of contention was the proposed divestiture of 579 stores to C&S Wholesale Grocers, which was questioned by both sides. FTC attorney Laura Hall argued that this plan was designed for litigation rather than genuine business success. Wolf defended the move, suggesting that C&S was prepared to succeed.

The FTC also voiced concerns regarding the merger’s impact on approximately 710,000 employees. By merging, they argued, the unions would lose bargaining power. Wolf countered this claim, asserting that union influence would actually increase post-merger. “We will preserve the unions,” he promised.

U.S. District Court Judge Adrienne Nelson refrained from posing questions during the arguments. Although she didn’t specify a timeline for her ruling, she indicated that she would work diligently to reach a decision. If the FTC prevails, a deeper internal investigation into the merger will commence on October 1.

The FTC’s hearing is only the initial obstacle for Kroger and Albertsons. A lawsuit from the state of Washington aimed at blocking the merger has already commenced, while a separate trial in Colorado is set to begin on September 30. Even if they secure favorable rulings in these cases, a delay still looms before any merger can officially close.