Kroger and Albertsons hope to merge but must face a skeptical US government in court first

Dee-Ann Durbin, Associated Press Writer

The largest projected market shop merger successful U.S. history is going to court.

On 1 broadside are supermarket chains Kroger and Albertsons, which opportunity their planned merger will thief them compete against rivals for illustration Costco. On nan different broadside are antitrust regulators from nan Federal Trade Commission, who opportunity nan merger would destruct title and raise market prices successful a clip of already precocious nutrient value inflation.

Starting Monday, a national territory tribunal judge successful Portland, Oregon, will see some sides and determine whether to assistance nan FTC’s petition for a preliminary injunction. An injunction would hold nan merger while nan FTC conducts an in-house lawsuit against nan woody earlier an administrative rule judge.

Kroger, based successful Cincinnati, Ohio, operates 2,800 stores successful 35 states, including brands for illustration Ralphs, Smith’s and Harris Teeter. Albertsons, based successful Boise, Idaho, operates 2,273 stores successful 34 states, including brands for illustration Safeway, Jewel Osco and Shaw’s. Together, nan companies employment astir 710,000 people.

Here’s what to cognize up of nan hearing, which is expected to past until Sept. 13.

Why do Kroger and Albertsons want to merge?
Kroger and Albertsons – 2 of nan largest market chains successful nan U.S. – announced successful October 2022 that they planned to merge. The companies opportunity nan $24.6 cardinal woody would clasp down prices by giving them much leverage pinch suppliers and allowing them to harvester their shop brands. They opportunity a merger besides would thief them compete pinch large rivals for illustration Walmart, which now controls astir 22% of U.S. market sales. Combined, Kroger and Albertsons would power astir 13%.

Why does nan FTC want to artifact nan merger?
Antitrust regulators opportunity nan projected merger would destruct competition, starring to higher prices, poorer value and little wages and benefits for workers. In February, nan FTC issued a title seeking to artifact nan merger earlier an administrative judge astatine nan FTC. At nan aforesaid time, nan FTC revenge nan suit successful national tribunal successful Oregon seeking nan preliminary injunction. The attorneys wide of California, nan District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming each joined nan national lawsuit.

Will Kroger and Albertsons adjacent immoderate stores if they merge?
They opportunity no. If nan merger is approved, Kroger and Albertsons person agreed to waste 579 stores successful places wherever their stores overlap. The purchaser would beryllium C&S Wholesale Grocers, a New Hampshire-based supplier to independent supermarkets that besides owns nan Grand Union and Piggly Wiggly shop brands. Kroger and Albertsons initially planned to divest 413 stores, but nan FTC said that scheme would not person allowed C&S to beryllium a robust competitor. Kroger and Albertsons agreed to divest further stores successful April. Washington has nan astir stores that would beryllium divested, pinch 124, followed by Colorado pinch 91 and California pinch 63.

What happens if nan Oregon judge issues a preliminary injunction?
If nan preliminary injunction is approved, Kroger and Albertsons would apt entreaty to a higher court, said Mike Keeley, a partner and antitrust chair astatine Axinn, Veltrop & Harkrider, a Washington rule firm. The lawsuit could past move done nan FTC’s ain judicial system, but since that tin return a twelvemonth aliases more, companies often wantonness a woody earlier going done nan process, Keeley said. Kroger sued nan FTC this month, alleging nan agency’s soul proceedings are unconstitutional and saying it wants nan merger’s merits decided successful national court. In that case, revenge successful Ohio, Kroger cited a caller Supreme Court ruling that constricted nan powerfulness of nan Securities and Exchange Commission to effort immoderate civilian fraud complaints wrong nan agency alternatively of successful court.

What happens if nan Oregon judge agrees pinch Kroger and Albertsons?
The FTC would apt entreaty nan ruling, but Keeley said it’s uncommon for an appeals tribunal to reverse a little court’s ruling connected a merger, truthful nan FTC mightiness determine to driblet nan challenge. The lawsuit could still proceed done nan FTC’s administrative process. It’s unclear what effect nan statesmanlike predetermination could person connected nan case. The Biden management has been peculiarly fierce successful challenging mergers that it considered anti-competitive, but lawmakers from some parties expressed skepticism astir nan merger successful a 2022 hearing.

If nan national tribunal lets nan merger proceed, could authorities courts still forestall it?
Colorado and Washington person separately sued to artifact nan merger successful authorities courts. That’s an different situation; usually states are co-plaintiffs successful a national lawsuit. But some states judge they person a batch astatine stake. Colorado has much than 200 Kroger and Albertsons stores, while Washington has much than 300. Keeley said some states could activity their ain injunctions from a different tribunal if nan FTC loses, but it would beryllium astonishing for different tribunal to artifact nan merger if Kroger and Albertsons are successful successful nan national case.

An Albertsons market shop is seen, Oct. 14, 2022, successful Boise, Idaho. | Sarah A. Miller, Idaho Statesman via Associated Press, file