Nearly two years after announcing their blockbuster plan to merge, Kroger and Albertsons are set to square off in an Oregon courtroom with federal regulators bent on preventing the supermarket companies from combining. The grocers have sought for well over a year to win favor in the court of public opinion.
According to Grocery Dive, the judge overseeing the proceeding will determine whether to grant the Federal Trade Commission’s request to block the high-profile transaction because it would be anticompetitive and harmful to workers.
If the judge issues a preliminary injunction to stop the merger, that would pose a major — and potentially insurmountable — setback to Kroger and Albertsons, which have spent months publicly making the case that their deal would enable the grocers to serve consumers better and compete more effectively with rivals like Walmart.
Kroger and Albertsons have worked on multiple fronts to try to bring their merger to fruition, including by hammering out a deal to divest nearly 600 stores and other assets to C&S Wholesale Grocers in a bid to reduce concern that the merger would reduce options for consumers.
Kroger has also promised to devote $1 billion to lowering prices if the merger goes through. The company is making the case that it is on consumers’ side against a backdrop of persistent concerns among shoppers that grocery prices remain too high even though inflation has significantly declined.
As it works to overcome opposition to its bid to merge with Albertsons, Kroger also publicly disclosed the potential financial implications for its business of the proposed combination. If the companies had already been allowed to combine by that point, they would have together generated about $208 billion in sales for the year that ended Feb. 3, Kroger said in an Aug. 15 securities filing. Kroger reported sales of about $150 billion during its latest 12-month period, while Albertsons brought in about $79 billion over that time.
Beyond pitting the grocery chains against the FTC, the case unfolding in Oregon has also generated competing announcements from attorneys general in multiple states about the viability of the merger proposal. Top legal officials from eight states and Washington, D.C., are aligned with the FTC’s claim that the merger would inflict heavy damage on the grocery industry while hurting shoppers and reducing options for workers. But last week, four attorneys general — including the chief legal official for Ohio, where Kroger is headquartered — came out in favor of the merger, claiming in an amicus brief with the Oregon court that the regulators’ case reflects a “simplistic vision of the retail grocery market, and blocking the acquisition would weaken, not protect, competition among firms vying for consumer grocery purchases.”