The proposed merger between Kroger and Albertsons has hit a roadblock: Reuters reported that the $25 billion deal now hangs in the balance of a Colorado District Court ruling of a lawsuit that was filed by the U.S. Federal Trade Commission and eight states including Colorado and Washington.
Filed in February, the lawsuit aims to block the supermarket merger, which would claim more than 4,000 store locations, due to its expected influence on grocery prices. Reuters quoted Colorado State Attorney General Phil Weiser: "The trial is set to begin on Sept. 30 and my office looks forward to making the case that this merger will eliminate competition and impact food prices, jobs, and consumer choice."
According to Bloomberg News, a hearing that had been set for August 12 was canceled after a Colorado District Court judge granted a preliminary injunction halting the deal. In April, both Kroger and Albertsons announced that they were expanding their planned sale of stores to gain regulatory approval and would be offloading 166 more locations than the previously agreed upon 413 stores to C&S Wholesale Grocers. Reuters has additional details here.
Expert Insight
Offering perspective, Jay Jacobowitz, President and Founder of Retail Insights and Merchandising Editor for WholeFoods Magazine, said, "Combined, Kroger and Albertsons will have approximately $225 billion in total food and non-food sales. This compares to Walmart's $264 billion in food sales. And this is before Kroger and Albertsons divest nearly 600 of their combined 4,000 stores, reducing grocery volume further. Fears of higher prices post-merger ignore the basic competitive landscape of Walmart, Costco, Amazon, Aldi, and others applying constant pressure to remain competitive in pricing. I think we can view this as regional grocery union political influence over local politicians to bring these lawsuits to maintain union power; not to protect consumers."
