US supermarket mega-merger: Court blocks Kroger’s $43 billion move

The US commerce regulator said the merger rejection protects competition in the grocery market, which will prevent prices from rising. Photo / Gilaxia, Getty Images

A US judge suspended supermarket giant Kroger’s planned US$24.6 billion (NZ$43b) acquisition of rival chain Albertsons in a win for the Federal Trade Commission (FTC), which had argued the deal would harm consumers.

The order for a temporary block follows a three-week trial in Portland, Oregon, and deals a significant blow to what would have been one of the largest retail grocery deals in US history.

“Plaintiffs are likely to succeed on the merits and the equities weigh in favour of an injunction,” US District Judge Adrienne Watson wrote in a court filing confirming the preliminary injunction, which delays the deal but does not kill it.

The FTC had argued the acquisition would lead to higher prices for groceries and other essential household items for millions of Americans.

The judge rejected the companies’ arguments that the merger would generate billions in cost savings and lead to lower prices for consumers, finding these claims were “neither merger-specific nor verifiable”.

“Today’s win protects competition in the grocery market, which will prevent prices from rising even more,” FTC spokesperson Douglas Farrar wrote in a statement after the injunction was granted.

The injunction makes clear, he added, “that strong, reality-based antitrust enforcement delivers real results for consumers, workers, and small businesses”.

Neither Kroger nor Albertsons immediately responded to AFP requests for comment.

In a statement, the Joe Biden administration praised the judge’s decision.

“The Kroger-Albertsons merger would have been the biggest supermarket merger in history, raising grocery prices for consumers and lowering wages for workers,” National Economic Council deputy director Jon Donenberg said in a statement.

“Our administration is proud to stand up against big corporate mergers that increase prices, undermine workers, and hurt small businesses,” he added.

“The Kroger-Albertsons deal always faced an uphill battle in its bid for approval,” GlobalData managing director Neil Saunders wrote in a note to clients.

“While some of the FTC’s arguments were debatable, it operated from a position of strength.

“For both firms, it is now a case of putting this distraction behind them and going back to the drawing board,” he added.

In New Zealand, the Commerce Commission in October refused to give clearance for Foodstuffs to merge its North and South Island entities into a single national grocery company.

Foodstuffs is appealing the decision.

© Agence France-Presse. Additional reporting: NZ Herald