Federal judge blocks $25B Kroger-Albertsons merger, but leaves door open for future deal

A federal judge on Tuesday blocked the proposed $25 billion merger of grocery giants Kroger and Albertsons, ruling that the deal would limit competition and harm consumers, but the judge left the door open to a future attempt.

In a one-two punch, a Washington state judge later ruled in a separate case against the companies and blocked the merger, citing the state's consumer protection laws.

"In my view, the evidence convincingly shows that the current competition between Kroger and Albertsons stores is fierce in the State of Washington," King County Superior Court Judge Marshall Ferguson said at the hearing.

Albertsons announced its intent to merge with Kroger in 2022 for $24.6 billion. Their combined geographic forces would create a large national footprint and allow them to compete against mass retailers such as Walmart, Amazon and Costco, the stores argued.

In February 2024, the Federal Trade Commission (FTC) and nine attorneys general sued to block the merger, arguing that the “largest proposed supermarket merger in U.S. history” could hurt competition and workers and result in higher prices.

Kroger currently operates around 2,700 stores across 35 states and the District of Columbia, according to the federal judge, while Albertsons owns around 2,270 stores across 34 states and the district.

While the companies said they would sell 579 stores to C&S Wholesale to assuage antitrust concerns, Ferguson ruled it "will not be able to replicate the ferocity of that competition or compete in Washington against the colossus of a merged Kroger and Albertsons."

Judge Adrienne Nelson of the U.S. District Court in Oregon wrote in her ruling that there is "ample evidence that the divestiture is not sufficient in scale to adequately compete” with a merged Kroger and Albertsons and “will significantly disadvantage C&S as a competitor."

FTC spokesperson Douglas Farrar called the decision a “statement win.”

“Today’s win protects competition in the grocery market, which will prevent prices from rising even more. This statement win makes it clear that strong, reality-based antitrust enforcement delivers real results for consumers, workers, and small businesses,” Farrar said in a statement to The Hill.

Arizona Attorney General Kris Mayes, one of the plaintiffs, called the decision “a major victory for consumers, workers, and small businesses across the country.”

“Had this merger gone forward, it could have harmed families by reducing choices, driving up prices, and eliminating jobs. Here in Arizona, where countless communities rely on accessible, affordable grocery options, this decision helps ensure that residents won’t face the potentially devastating impacts of such a consolidation,” Mayes said.

Albertsons said in a statement that it was “disappointed” by the decision and would be evaluating its options.

Kroger and Albertsons both said they were "disappointed" by the decision and would be reviewing their options.

“We are disappointed by the U.S. District Court’s decision to grant the FTC’s request for a preliminary injunction. We believe we clearly outlined during the proceedings how the proposed merger would expand competition, lower prices, increase associate wages, protect union jobs, and enhance customers’ shopping experience. We are carefully reviewing the Court’s opinion and are evaluating our options in accordance with the merger agreement,” Albertsons said in a statement.

A Kroger spokesperson said the decisions "overlook the substantial evidence presented at trial showing that a merger between Kroger and Albertsons would advance the company’s decades-long commitment to lowering prices, respecting collective bargaining agreements, and is in the best interests of customers, associates, and the broader competitive environment in a rapidly evolving grocery landscape."

The federal judge who issued the injunction left the door open for a future merger, but called the proposed deal “premature.”

“Although defendants may choose to abandon the merger because of the preliminary injunction, this order in no way forces them to do so, and leaves open the possibility that they may pursue the merger at a later date should it be deemed lawful in the administrative proceedings,” wrote Nelson.

“An injunction simply pauses the merger. Any harms defendants experience as a result of the injunction do not overcome the strong public interest in the enforcement of antitrust law, especially given the difficulty in disentangling a premature merger.”

Updated at 6:03 p.m. ET.

Topics

Albertsons sues Kroger after federal judge blocks merger

Grocery giant Albertsons called off its nearly $25 billion merger with Kroger after a federal judge temporarily blocked the union Tuesday in an effort to protect consumers from increasing costs. ...
CBS News - 2h
Albertsons sues Kroger, backs out of $25B merger after courts block the deal

Albertsons has filed a lawsuit against Kroger one day after federal judges blocked a potential $24.6 billion merger deal.
ABC News - 8h
Albertsons abandons merger with Kroger after a judge temporarily blocked the deal

Albertsons called off a $25 billion merger with rival Kroger after a judge temporarily halted the deal. The grocery chain is also suing Kroger for willful breach of contract and breach of the ...
CBS News - 11h
Federal Judge Blocks $25 Billion Kroger-Albertsons Grocery Merger

The ruling, citing a potential loss of competition, was a victory for the Federal Trade Commission. Later, a Washington State judge blocked the deal on similar grounds.
The New York Times - 23h
Judges block Kroger-Albertsons merger. Continuing the courtroom fight could test investors’ patience.

The supermarket chains said they were disappointed with Tuesday’s court rulings, adding that they are reviewing their options.
MarketWatch - 1d
Federal judge temporarily blocks Kroger-Albertsons merger

A federal judge has temporarily blocked the merger of grocery giants Kroger and Albertsons after a three-week hearing. The Federal Trade Commission sued over the $25 billion deal in February, ...
CBS News - 1d
US judge blocks $25bn Kroger-Albertsons grocery merger

Deal challenged by Federal Trade Commission would consolidate two of the country’s biggest supermarket operators
Financial Times - 1d