Grocery giants Kroger and Albertsons are facing off against the Federal Trade Commission in federal court, with the two sides fighting over the largest proposed supermarket merger in U.S. history. On Monday, a judge opened a hearing to decide whether to issue a preliminary injunction that would halt the merger plans.
What’s going on?
In October 2022, Kroger and Albertsons announced that they had agreed to merge in a deal valued at $24.6 billion, bringing together Kroger’s vast collection of supermarkets, including the Ralphs chain, and Albertsons’ roster, including the Vons and Pavilions chains.
Kroger and Albertsons say they need to combine in order to better compete with larger, nonunionized rivals such as Amazon, Walmart and Costco. Kroger Chief Executive Rodney McMullen has vowed to use $1 billion in annual savings created by the proposed merger to lower shelf prices, remodel stores and improve worker wages and benefits.
Kroger, based in Cincinnati, Ohio, operates 2,800 stores in 35 states. Albertsons, based in Boise, Idaho, operates 2,273 stores in 34 states. Together, the companies employ around 710,000 people.
What was the reaction to the proposed deal?
Consumer advocates and union representatives quickly decried the proposed merger and urged the government to take a hard look at the potential effects and block the combination. Shoppers, too, voiced concern that a deal would lead to store closures.
What is the FTC’s position?
In February, the FTC issued a complaint seeking to block the merger before an administrative judge.
At the same time, the regulatory agency filed a lawsuit in federal court in Oregon seeking the preliminary injunction. The attorneys general of California, Arizona, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming all joined the federal lawsuit.
The FTC said the combination of the two supermarket companies would obliterate competition between the major grocers, leading to higher prices and lower-quality products for millions of Americans. It also alleged that the deal would hurt workers, eliminating their ability to negotiate for higher wages and better benefits.
Will my local grocery store be affected if a deal goes through?
Last month, Kroger and Albertsons announced plans to offload 63 supermarkets in California as part of the planned merger.
Those locations, primarily in Southern California, are among hundreds of stores, distribution centers and plants that the companies have proposed selling to another company, C&S Wholesale Grocers, in an effort to allay regulators’ concerns about the mega-merger. Regulators have appeared unswayed that the proposed sell-off, valued at $2.9 billion, would meaningfully change the level of competition in grocery industry.
The 63 California stores listed consist of 15 Albertsons locations, including two in Huntington Beach; 31 Vons locations, including the store on Fairfax Avenue in Los Angeles, as well as the location on West 3rd Street; 16 Pavilions locations; and one Safeway in the Bay Area.
Now what?
A federal district court judge in Portland, Ore., will consider both sides and decide whether to grant the FTC’s request for a preliminary injunction. An injunction would delay the merger while the FTC conducts an in-house case against the deal before an administrative law judge.
Opening remarks by both sides began Monday morning, with the hearing expected to last until Sept. 13. Both sides are expected to appeal if they don’t win.
Tim Massa, Kroger’s chief people officer, said in a statement Monday that the merger would “secure the long-term future of union jobs.”
“Kroger, Albertsons and C&S are committed to honoring all current collective bargaining agreements alongside bargained-for wages and benefits and ensuring zero frontline worker layoffs and no store closures as a result of the merger,” he said. “The only parties that will benefit if this deal is blocked will be the large, non-unionized retailers.”
Times staff writer Suhauna Hussain and the Associated Press contributed to this report.
This story originally appeared in Los Angeles Times.