Kroger-Albertsons Merger Halted By Courts After MD Challenge

MARYLAND — A proposed merger between grocery giants Kroger and Albertsons was halted Tuesday by two judges overseeing separate cases, leaving the $24.6 billion deal in legal limbo.

U.S. District Court Judge Adrienne Nelson issued a preliminary injunction blocking the merger Tuesday after holding a three-week hearing in Portland, Oregon.

Later Tuesday, Judge Marshall Ferguson in Seattle issued a permanent injunction barring the merger in Washington after concluding it would lessen competition in the state and violate Washington's consumer-protection laws.

The legal setback comes nearly a year after the FTC, Maryland Attorney General Anthony Brown and a bipartisan coalition of states filed a lawsuit challenging the proposed merger, saying it would eliminate competition and raise grocery prices in a time of already high food price inflation.

On Tuesday, Brown lauded the judge's decision.

“As the cost of basic necessities rise, Marylanders are spending more and more of their paychecks on groceries," Brown said in a statement. "Had this merger gone forward, these supermarkets would no longer have had a reason to offer lower prices than their main competitor, making it harder for Maryland families to put food on their tables."

Cincinnati-based Kroger operates 2,800 stores in 35 states, including brands like Ralphs, Smith’s and Harris Teeter. Based in Boise, Idaho, Albertsons operates 2,273 stores in 34 states, including brands like Safeway, Jewel Osco and Shaw’s. Together the companies employ around 710,000 workers and thousands of people across more than 80 stores in Maryland

There are 60 Safeway stores in Maryland and 18 Harris Teeter stores in the state.

The federal case now moves to the Federal Trade Commission, although Kroger and Albertsons have asked a different federal judge to block the in-house proceedings. Colorado is also trying to halt the merger in its own state trial.

The two companies proposed what would be the largest supermarket merger in U.S. history in October 2022. They said joining together would help them rein in costs and better compete with big rivals like Walmart and Costco.

Kroger had promised to invest $1 billion in lower grocery prices, an additional $1 billion in higher grocery worker wages and $1.3 billion to improve Albertsons stores; Judge Nelson wasn't swayed.

“The promise to make a price investment is not legally binding, and the court must give limited weight to a non-binding promise made during these proceedings,” she wrote in her decision. Nelson added that the companies can still invest in lower prices if the FTC approves the merger in its administrative hearings.

The FTC called Nelson’s decision “a major victory for the American people" that will protect them from higher grocery prices. In Washington, Governor-elect Bob Ferguson, who brought the case against Kroger and Albertsons as the state’s attorney general, called the state court’s decision “an important victory for affordability, worker protections and the rule of law.”

Federal regulators argued that combining the two chains would be bad for consumers and workers by eliminating competition.

A coalition of United Food and Commercial Workers local unions representing more than 100,000 Kroger and Albertsons employees applauded the court decisions Tuesday.

“This mega-merger would be bad for workers who deserve a workplace where they can be paid well for their labor, be safe and be respected,” the unions said.

The Associated Press contributed to this report.