Albertsons bails from grocery merger, sues Kroger

Albertsons Companies Inc. on Wednesday morning said it was cutting its merger agreement with Kroger, the day after receiving unfavorable court rulings on the agreement. Separately, Albertsons said it was suing Kroger over the failed plan to join the two grocery chains. In response, Kroger said the lawsuit was baseless.

A federal district court judge in Oregon and a Washington state judge on Tuesday both sided with the U.S. Federal Trade Commission in its attempt to stop grocery giant Kroger from purchasing rival chain Albertsons.

What court rulings prompted this action? Judge Adrienne Nelson of the U.S. District Court in Oregon placed a preliminary injunction on the deal, while Judge Marshall Ferguson in Seattle prohibited the companies from merging in Washington state. The companies in 2022 agreed to merge, with Kroger expected to buy about $24.6 billion of Albertsons stock. The FTC in February challenged the acquisition, saying it would eliminate competition, leading to higher grocery prices. Kroger and Albertsons have more than 5,000 stores combined across the country and employ more than 700,000 people.

What else was included in the merger plan? Under the agreement, the companies would sell 579 stores in areas that overlap with a third competitor, C&S Wholesale Grocers. Kroger also promised to invest $1 billion to lower grocery prices, $1 billion to raise wages for workers, and $1.3 billion to improve Albertsons stores. The companies said the merger would help them compete with companies like Walmart and Costco. The companies in August filed a motion seeking an injunction against the FTC’s challenge and said they were prepared to defend the merger.

How has the FTC reacted to the rulings? The commission on Tuesday issued a statement applauding the decisions as a victory against what would have been the largest grocery merger in history.

Dig deeper: Read Addie Offereins’ report in World Magazine about America’s massive food bank system.