FTC and States Poised to Sue to Block Kroger-Albertsons Merger

The US Federal Trade Commission (FTC) and a coalition of states are gearing up to file a lawsuit aimed at thwarting the proposed merger between supermarket giants Kroger and Albertsons. Bloomberg Law reports that the suit is anticipated to be filed before February 28, marking a pivotal moment as the expiration of an agreement not to close the deal draws near.

Sources familiar with the matter, who opted for anonymity due to the sensitivity of the issue, revealed that several states are expected to align forces with federal antitrust enforcers in challenging the consolidation of Kroger and Albertsons. The move underscores growing concerns over potential monopolistic repercussions stemming from the merger, which could reshape the competitive landscape of the grocery industry.

Preceding the potential legal action, the companies are striving to secure meetings with key figures at the FTC, including Chair Lina Khan and other commissioners. Their objective is to present arguments aimed at dissuading the antitrust agency from pursuing legal action against their proposed merger. However, the outcome of these discussions remains uncertain, with the FTC and states signaling a readiness to challenge the consolidation.

Read more: US Unions Talk Out Against The Albertsons-Kroger Merger

News of the impending lawsuit had an immediate impact on the stock market, particularly for Albertsons, whose shares tumbled by as much as 2.7% upon the revelation. The closing bell saw Albertsons’ shares down 1.4% at $21.28. This decline contributed to a widening gap between Albertsons’ stock price and Kroger’s offer of $27.25 per share, a gap that suggests investors harbor skepticism regarding the deal’s approval. Conversely, Kroger’s shares experienced a modest uptick of 1.4%.

Responding to the developments, a spokesperson for Kroger reiterated the company’s commitment to engaging with the FTC and state regulators. They emphasized the potential benefits of the merger, including lower prices, increased job opportunities, and expanded consumer choices. Moreover, they warned against the ramifications of blocking the merger, suggesting it could empower larger, nonunionized retailers to dominate the market.

Similarly, Albertsons emphasized its cooperation with the FTC and reiterated the purported advantages of the merger, including enhanced competition, lower prices, and an improved shopping experience for customers per Bloomberg Law.

As the clock ticks towards the February 28 deadline and with legal action looming, the fate of the Kroger-Albertsons merger hangs in the balance, poised to reshape the dynamics of the grocery retail landscape pending regulatory decisions.

Source: News Bloomberg Law