Judge halts proposal to merge Kroger, Albertsons

(Allen J. Schaben / Los Angeles Times via Getty Images)

A much-debated merger of grocery giants Kroger and Albertsons was dealt a potentially fatal blow Tuesday when a federal judge in Oregon sided with federal regulators who argued the deal would scuttle competition, lead to higher prices for consumers and hurt grocery workers in the Southland and beyond.

The Federal Trade Commission, in conjunction with California and seven other states, filed a lawsuit in February to challenge the proposed $24.6 billion merger.

Kroger officials, who said the merger would help the new company better compete with major conglomerates such as Walmart and Amazon, insisted the move would not lead to higher prices or lead to wholesale store closures that would put people out of work. The company said it would spin off 579 stores to C&S Wholesale Grocers, ensuring their continued operation.

But following a three-week trial, U.S. District Judge Adrienne Nelson agreed with the FTC, saying the merger would eliminate competition between two of the nation's largest grocery chains, leading to higher prices, potentially fewer jobs and negative impacts on unionized grocery workers.

In a statement to Reuters following the judge's ruling, FTC spokesman Douglas Farrar said the decision "protects competition in the grocery market, which will prevent prices from rising even more. This statement win makes it clear that strong, reality-based antitrust enforcement delivers real results for consumers, workers and small businesses."

There was no immediate response from Kroger/Albertsons. Kroger is the parent company of Southern California grocery giant Ralphs, along with Food 4 Less and other outlets.

Officials with the United Food and Commercial Workers Union, which represents grocery workers, issued a statement saying the merger "would be bad for workers who deserve a workplace where they can be paid well for their labor, be safe and be respected."

"It would be disastrous for shoppers who deserve competition that leads to better choices and lower prices," according to the union. "The merger would be detrimental to our communities, would harm farmers and suppliers who deserve a healthy balance to negotiate fair prices for their hard work. Instead, the proposed merger would create an out-of-balance system that drives up prices, drives out competition, and drives down wages and safety standards."

State Attorney General Rob Bonta, whose office joined the FTC in the litigation challenging the merger, called the ruling a "win for California households and communities."

"As many families continue to feel the burden of inflation, fighting corporate consolidation that threatens to increase grocery prices is more important than ever," Bonta said in a statement. "In some markets in Southern California, Kroger-Albertsons would have been the only one-stop grocery option, leaving consumers limited choice over where to shop -- and for workers in this industry, where to work."

The proposed merger was announced in 2022, a deal that would consolidate ownership of Ralphs, Albertsons, Vons and other supermarket chains. When the deal was announced, Kroger officials said the combined new company would include nearly 5,000 stores, 66 distribution centers, 52 manufacturing plants, 3,972 pharmacies and 2,015 fuel centers. More than 710,000 people work for the two companies.