Grocery giant Kroger’s $25 billion attempt to acquire rival Albertsons was halted by a U.S. district judge in Oregon, who determined that the Federal Trade Commission’s worries about the merger’s effect on market concentration were legitimate.
Judge Adrienne Nelson declared on Tuesday afternoon that consumers would suffer if the two businesses merged.
The two businesses “engage in substantial head-to-head competition and the proposed merger would remove that competition,” according to Ferguson’s letter. The planned merger would therefore probably result in consequences that “unilaterally” hurt customers, making it “presumptively unlawful.”
Ferguson further declared that the merger would be detrimental to workers, claiming that workers’ bargaining strength would be diminished by further concentration.
“We are disappointed by the U.S. District Court’s decision to grant the FTC’s request for a preliminary injunction,” Albertsons said in a statement.
“We think we made it very apparent throughout the hearings how the proposed combination will improve the shopping experience for customers, protect union jobs, increase associate salaries, cut prices, and increase competition. According to the merger agreement, we are carefully examining the Court’s ruling and weighing our options,” the statement stated.
In addition to expressing regret, a Kroger representative stated that the business “is currently reviewing its options.”
Cincinnati-based Kroger has stated that a court decision such as this one would essentially put a stop to the merger.
The FTC praised the ruling, stating that it had prevented Kroger’s purchase of Albertsons, marking a significant win for the American people.
“This victory has a direct, tangible impact on the lives of millions of Americans who shop at Kroger or Albertsons-owned grocery stores for their everyday needs, whether that s a Fry s in Arizona, a Von s in Southern California, or a Jewel-Osco in Illinois,” the Federal Trade Commission said in a statement.
While shares of Boise, Idaho-based Albertsons ended the day 2% lower, Kroger’s stock closed up 5% on Tuesday.
In order to stay competitive with big box stores like Walmart, Target, and Amazon, which have greatly expanded their grocery businesses, Kroger had maintained that the agreement was essential.
However, Nelson stated that the effects of the proposed merger must be taken into consideration and that “supermarkets” still constitute a unique, niche sector within the American consumer landscape.
The decision is a win for the Biden administration, and in particular for FTC Chair Lina Khan, who has challenged mergers that could lead to monopolies with a never-before-seen level of vigor.
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