Antitrust Regulator Files Lawsuit To Block Kroger's $25B Bid For Albertsons

Kroger Company‘s KR $25 billion bid to take over rival supermarket Albertsons Companies ACI was hanging in the balance on Monday after the Federal Trade Commission (FTC) filed a lawsuit to block the merger.

Shares in Kroger fell 1.7% while Albertsons gained 0.6% after the FTC said it had filed a lawsuit with a federal court in Oregon to stop the merger from going ahead.

Kroger had sold the deal to Albertsons on the premise the combined company would be better positioned to compete with larger rivals such as Walmart Inc WMT and Costco Wholesale Corp COST.

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Financial Strain For Consumers

In challenging the merger the FTC maintained that the deal would lead to higher food prices and lower wages for the staff of the combined company.

“This supermarket megamerger comes as American consumers have seen the cost of groceries rise steadily over the past few years. Kroger's acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today,” said Henry Liu, director of the FTC's bureau of competition.

In a press statement on Monday, Kroger countered, saying that blocking the deal would harm the very people that the FTC aims to protect.

“Kroger’s business model is to take costs out of the business and invest in lowering prices for customers. Kroger has reduced prices every year since 2003,” the statement said.

It added: “This decision only strengthens larger, non-unionized retailers like Walmart, Costco and Amazon AMZN by allowing them to further increase their overwhelming and growing dominance of the grocery industry.”

Companies To Defend Merger In Court

Kroger, based in Cincinnati, operates around 2,700 stores under its namesake brand and regional stores such as Fred Meyer and Ralph’s, while Albertsons manages around 2,300, including the Safeway chain.

Kroger said it looked forward to defending the merger in court, “so we can deliver the benefits to communities across America — lower prices, more choices, and more good-paying union jobs for decades to come.”

Previous so-called megamergers that the FTC tried to block include Microsoft Corporation‘s MSFT $68.7 billion takeover of games producer Activision Blizzard, which completed in October 2023.

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Image created using artificial intelligence with MidJourney.