OAN Staff James Meyers
11:07 AM – Wednesday, December 11, 2024
A U.S. district judge in Oregon has blocked a $25 billion bid by supermarket giant Kroger to take over its rival Albertsons, ruling that the Federal Trade Commission’s concerns about the merger’s impact on market consolidation were valid.
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Judge Adrienne Nelson said Tuesday afternoon that a merger between the two companies would end up harming consumers.
“We have made the difficult decision to terminate the merger agreement,” Albertsons CEO Vivek Sankaran also said in a statement on Wednesday.
The two companies “engage in substantial head-to-head competition and the proposed merger would remove that competition,” Nelson wrote. As a result, the proposed merger would be likely to lead to outcomes that “unilaterally” harm consumers and is thus “presumptively unlawful. “
In 2022, the merger was seeking to combine the eighth and tenth largest retailers in the United States. The companies own dozens of grocery chains, which includes Safeway, Fred Meyer, Vons and Harris Teeter.
Additionally, Albertsons sued Kroger for breach of its contract agreement, alleging Kroger caused the merger to be blocked. Albertsons said that Kroger failed to exercise its “best efforts” and to take “any and all actions” to secure regulatory approval of the merger.
Albertsons said in a statement that it is “disappointed by the U.S. District Court’s decision to grant the FTC’s request for a preliminary injunction.”
“We believe we clearly outlined during the proceedings how the proposed merger would expand competition, lower prices, increase associate wages, protect union jobs, and enhance customers’ shopping experience. We are carefully reviewing the Court’s opinion and are evaluating our options in accordance with the merger agreement,” it said.
Despite Kroger and Albertsons saying that the merger would result in lower prices for consumers, critics argued that it would only lead to higher prices for shoppers.
As a result, both Kroger and Albertsons’ stocks gained on Wednesday. Albertsons also helped drive up its stock by announcing that it would buy back up to $2 billion worth of shares.
Currently, Kroger is the largest grocery chain in America.
Kroger CEO Rodney McMullen said last week that the company was well positioned to grow even if the deal ended.
“We’ve always made sure that we don’t need to do mergers to make our business successful,” he said. “If it doesn’t happen, we’ll continue to go on.”
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