Albertsons Sues Kroger After Courts Block $24.6 Billion Merger

Court Rulings Derail Merger

On Tuesday, U.S. District Court Judge Adrienne Nelson granted a preliminary injunction against the merger following a three-week hearing in Portland, Oregon. Within hours, Washington state Judge Marshall Ferguson issued a permanent injunction, citing concerns that the merger would reduce competition in the state and violate consumer protection laws.

According to Axios, these legal setbacks marked a significant blow to what was poised to be the largest grocery merger in U.S. history. The proposed union between Kroger and Albertsons, which operate in 22 states, was intended to bolster their competitiveness against retail giants like Walmart, Amazon, and Costco.

Regulatory Pushback

The merger faced mounting opposition from regulators, including the Federal Trade Commission (FTC), which filed a lawsuit earlier this year to block the deal. The FTC argued that the merger would lead to higher prices for consumers and lower wages for workers by reducing competition. It also criticized the companies’ plan to sell 579 stores to C&S Wholesale Grocers, asserting that the divestiture strategy was insufficient and that C&S lacked the capacity to handle such a large acquisition.

Related: Judge Halts Kroger-Albertsons Merger Over Antitrust Concerns

Allegations of Breach of Contract

Albertsons now alleges that Kroger breached their merger agreement by failing to address antitrust concerns. The company contends that Kroger refused to divest assets that could have satisfied regulatory requirements, ignored feedback from regulators, and rejected alternative buyers for divested stores who were deemed more capable.

In a statement issued Wednesday, Tom Moriarty, Albertsons’ general counsel, criticized Kroger’s handling of the process, saying, “Kroger’s self-serving conduct, taken at the expense of Albertsons and the agreed transaction, has harmed Albertsons’ shareholders, associates, and consumers.”

Kroger Responds

Kroger has denied Albertsons’ claims, stating it “disagrees in the strongest possible terms.” The company accused Albertsons of engaging in “repeated intentional material breaches and interference throughout the merger process,” according to Axios.

Fallout and Next Steps

The failed merger highlights the challenges of navigating antitrust scrutiny in an era of heightened regulatory oversight. While the lawsuit between the two grocery chains unfolds, the incident underscores the complexities and risks associated with large-scale corporate mergers in competitive industries.