A federal judge has imposed a temporary ban proposed merger between supermarket giants Kroger and Albertsons, a move that could derail the deal.
U.S. District Court Judge Adrienne Nelson issued the ruling Tuesday after issuing a ruling three-week hearing in Portland, Oregon.
Kroger and Albertsons proposed what the solution would be in 2022 largest merger of supermarkets in American history. But the Federal Trade Commission has filed a lawsuit earlier this year, he asked Nelson to block the $24.6 billion deal until an internal administrative law judge at the FTC could consider the merger’s implications.
Nelson agreed to pause the merger.
“Any harm defendants may experience as a result of the injunction does not overcome the strong public interest in antitrust enforcement, especially given the difficulty of unraveling a premature merger,” she wrote in her opinion.
Federal regulators argue that combining the two chains would be possible bad for consumers and employees by eliminating the competition. That’s what the companies say a merger would help them better compete with major retailers like Walmart, Costco and Amazon.
The case may now move to the FTC, although Kroger and Albertsons have asked another federal judge to block the internal proceeding. Colorado And Washington are also trying to stop the merger in ongoing state processes. The judge in Washington was expected to issue his ruling later Tuesday.
The FTC argued that Kroger and Albertsons currently compete with each other in 22 states and closely match each other on price, quality, private label products and services such as in-store pickup. A merger would that remove competition and already increasing prices struggling consumersthe government said. The FTC also said the merger would hurt workers as Kroger and Albertsons would no longer compete to hire them.
But Kroger and Albertsons argued that their merger would preserve consumer choice by allowing them to better compete with their growing rivals. In his testimony, Albertsons warned Nelson that it might have to lay off employees, close stores and even exit some markets if the merger doesn’t go through.
Under the merger agreement, Kroger and Albertsons would do just that sell 579 stores in places where their locations overlap c&S Wholesale Grocersa New Hampshire-based supplier to independent grocery stores that also owns the Grand Union and Piggly Wiggly store brands.
The FTC argued that C&S is ill-prepared to take over the stores and may want the option to sell or close them. But Kroger and Albertsons said C&S has the experience and national scale to handle the divestment.
Krogerbased in Cincinnati, Ohio, it operates 2,800 stores in 35 states, including brands such as Ralphs, Smith’s and Harris Teeter. Albertsonsbased in Boise, Idaho, it operates 2,273 stores in 34 states, including brands such as Safeway, Jewel Osco and Shaw’s. Together the companies employ approximately 710,000 people.