35 Jewel, Mariano's Stores Will No Longer Be Sold As Judges Block Merger

CHICAGO — Dozens of Jewel-Osco and Mariano’s stores across the Chicago area are no longer expected to be sold after judges in separate cases Tuesday both halted a proposed merger between supermarket giants Kroger and Alberstons.

The 35 local stores were set to be divested under the $24.6 billion merger, announced over two years ago, with both companies agreeing to sell almost 600 stores and other facilities nationwide to C&S Wholesale Grocers, which owns Piggly Wiggly. Kroger owns Mariano’s and Albertsons owns Jewel-Osco.

The Federal Trade Commission sued earlier this year over the merger, asking U.S. District Court Judge Adrienne Nelson to block the deal until an in-house administrative judge for the agency could consider the merger's implications. Attorneys general from Arizona, California, Illinois, Maryland, Nevada, New Mexico, Oregon, Wyoming and the District of Columbia joined the lawsuit.

Nelson issued a preliminary injunction blocking the merger Tuesday after a three-week hearing in Portland, Oregon. The federal case now moves to the FTC, although Kroger and Albertsons have asked a different federal judge to block the in-house proceedings.

The ruling “marks a likely death knell for the deal between the parent companies of Chicago grocers,” according to Crain’s Chicago Business.

Later Tuesday, Judge Marshall Ferguson in Seattle issued a permanent injunction barring the merger in Washington after concluding that it would lessen competition in the state.

Kroger and Albertsons said Tuesday they are disappointed in the decisions and are reviewing their options. The companies could appeal, although the deal could fall apart in the time it would take for those cases to be considered.

The FTC called Nelson’s decision “a major victory for the American people" that will protect them from higher grocery prices. A coalition of United Food and Commercial Workers local unions representing more than 100,000 Kroger and Albertsons employees applauded the court decisions Tuesday.

The FTC had argued that Kroger and Albertsons compete in 22 states, closely matching each other on price, quality, private label products and services like store pickup. A merger would eliminate that competition and raise prices for already struggling consumers, the government said. The agency also argued that C&S is ill-prepared to take on the stores and may want the option to sell or close them.

Kroger and Albertsons said a merger would help them better compete with big retailers like Walmart, Costco and Amazon. In its testimony, Albertsons warned Nelson that it might have to lay off workers, close stores and even exit some markets if the merger weren't allowed to proceed.

The Associated Press contributed to this story.