:max_bytes(150000):strip_icc()/GettyImages-2157423897-ba6d44144af34fc59c4e7ff6966b4483.jpg "What’s at Stake as FTC’s Legal Fight Against Kroger-Albertsons Merger Ends")
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Key Takeaways
- The legal battle over the Federal Trade Commission’s efforts to halt the $24.6 billion Kroger-Albertsons merger is scheduled to end Tuesday, with massive implications for the larger grocery industry.
- The FTC has said allowing the merger would mean higher prices and worse labor conditions and wages for Americans.
- Kroger and Albertsons have responded by saying merging would allow them to compete against retail giants like Amazon, Walmart, and Costco.
The Federal Trade Commission’s (FTC) legal challenge against the proposed $24.6 billion merger of Kroger (KR) and Albertsons (ACI) is set to end in an Oregon federal court Tuesday, with a judge to rule whether the regulator’s antitrust argument is sufficient to halt the combination.
The FTC has argued that a merger between the country’s two largest traditional supermarket chains could have anticompetitive impacts on prices and labor, impacting millions of Americans when prices have already risen substantially in recent years.
FTC, Retailers Argue Over Competitive Impacts
While the FTC has said the merger would reduce competition, the companies have responded by saying operating as a larger chain would allow them to better compete with the country’s largest retailers like Walmart (WMT), Costco (COST), and Amazon (AMZN).
In its complaint, the FTC puts supermarkets like Kroger and Albertsons in a different category than the competition the companies cite. The regulator said the membership-only nature and bulk selection of a smaller range of products at Costco and Sam’s Club, and the largely digital shopping experience of Amazon with a minimal retail footprint, put them in different categories for customers.
If the court agrees with the FTC, the agency’s own definition of a supermarket could open the door for one of the companies it defined as not a supermarket like Amazon to potentially make acquisitions like the one the FTC is trying to block, a pair of antitrust lawyers told The Wall Street Journal.
The regulator has also said the plan for the companies to sell hundreds of stores to another retailer to address competitive concerns isn’t enough, saying the sale of a “hodgepodge” of stores and assets wouldn’t “mitigate the substantial harm to consumers and workers” if they merged.
Kroger shares were little changed about 90 minutes after the opening bell Tuesday. Albertsons shares were down 1.6%.