Federal Court Blocks Kroger-Albertsons Merger Over Antitrust Concerns

Judge Adrienne Nelson of the U.S. District Court for the District of Oregon has stepped in to block the proposed $24.6 billion merger between Kroger Co. and Albertsons Companies, Inc. On December 10, 2024, the court issued a preliminary injunction, reflecting growing concerns about the merger’s potential to harm competition, raise consumer prices, and negatively affect grocery store workers.

The Federal Trade Commission (FTC), along with a coalition of nine state attorneys general led by Oregon’s own Attorney General Ellen Rosenblum, filed to stop what would have been the largest supermarket merger in U.S. history. The ruling is seen as a significant win for consumers, workers, and antitrust principles more broadly.

The termination of the Kroger-Albertsons merger deal followed the court’s ruling, marking the end of a two-year effort to combine the two grocery giants. Albertsons officially ended its $25 billion bid to merge with Kroger on December 6, 2024, and filed a lawsuit against its rival, accusing Kroger of breaching the merger agreement. Albertsons claims Kroger failed to take "any and all actions" necessary to secure regulatory approval for the deal.

In a statement, Albertsons CEO Vivek Sankaran expressed regret over the decision but pointed to the court’s rulings as the reason for the termination. “Given the recent federal and state court decisions to block our proposed merger with Kroger, we have made the difficult decision to terminate the merger agreement,” Sankaran said.

As part of its lawsuit, Albertsons is seeking billions of dollars in damages, in addition to the $600 million termination fee outlined in the original agreement. Kroger, however, has dismissed the claims as baseless. A spokesperson for the company stated that the lawsuit is an attempt to deflect responsibility, adding that Kroger had already notified Albertsons of its multiple breaches of the agreement. “This is clearly an attempt to deflect responsibility following Kroger’s written notification of Albertsons' multiple breaches of the agreement, and to seek payment of the merger’s break fee, to which they are not entitled,” the spokesperson said.

Harm to Consumers & Workers Cited

Judge Nelson’s decision aligns with the concerns raised by the FTC and the state coalition, who argued that the merger would eliminate crucial competition between two of the biggest supermarket chains in the country. This would likely lead to higher grocery prices and a decrease in the quality of goods and services. The FTC had already warned that such a merger would undermine innovation, reduce consumer choices, and further fuel the rising cost of groceries, which have been a growing burden for households across the nation.

“This supermarket mega merger comes at a time when American consumers have already seen their grocery bills climb steadily over the past few years,” said Henry Liu, Director of the FTC’s Bureau of Competition, when the lawsuit was first filed. “Kroger’s acquisition of Albertsons would only add to these hikes, making it even harder for consumers to stretch their budgets.”

Workers would also face challenges under the merger. Both Kroger and Albertsons are two of the largest employers of unionized grocery labor in the U.S., and the competition between them helps keep wages, benefits, and working conditions fair. The FTC argued that the merger would reduce this competition for labor, leaving the combined company in a stronger position to offer lower wages and less favorable conditions. For workers, especially in areas like Denver, where the two companies compete fiercely, the merger could undermine collective bargaining power.

A Flawed Divestiture Plan

Kroger and Albertsons attempted to address antitrust concerns by proposing to divest several hundred stores to C&S Wholesale Grocers. However, the FTC dismissed this plan as insufficient, labeling it a “hodgepodge” of assets that would fail to create a meaningful competitor. The agency argued that the proposed divestiture would leave C&S unable to replicate the competitive dynamics currently in place between Kroger and Albertsons, particularly in regional markets where both companies directly compete.

Oregon Attorney General Rosenblum was quick to praise the court’s decision.

“At a time when soaring grocery and pharmacy prices are stretching household budgets, today’s decision is a win for Oregonians and a win for competition,” she said. She also highlighted the collaborative efforts of the Oregon Department of Justice, the FTC, and the other participating states in challenging the merger.

The coalition of states involved in the lawsuit—including Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon, and Wyoming—illustrates the wide-reaching impact of the merger. The decision signals a strong federal-state partnership in tackling corporate consolidation that threatens both competition and consumer welfare.

While this ruling is a major setback for Kroger and Albertsons, the battle is far from over. The merger is temporarily blocked while the FTC’s administrative proceedings continue. The final outcome could set an important precedent for how regulators approach mergers in industries where consolidation has been accelerating.

Kroger and Albertsons argue that the merger would lead to greater operational efficiencies and better competition against nontraditional grocery rivals like Walmart and Amazon. However, the FTC and its allies remain firm in their stance, emphasizing that any potential benefits fall short of justifying the merger’s risks to competition.

A Broader Antitrust Movement

This case reflects a broader trend of growing scrutiny on corporate consolidation under the Biden administration, which has placed a renewed emphasis on antitrust enforcement. Lina Khan, Chair of the FTC, has been particularly vocal about protecting market competition, especially in industries that directly affect consumers' daily lives.

The Kroger-Albertsons case is likely to serve as a bellwether for future challenges to large-scale mergers in other sectors. With this decision, regulators and state attorneys general have made it clear that they are willing to take on corporate giants when their deals threaten to harm competition, regardless of the companies' size or market influence.

Blocking the Kroger-Albertsons merger represents a pivotal moment in U.S. antitrust enforcement. As the case progresses, it will not only shape the future of the grocery industry but also influence how courts and regulators address corporate consolidation across the broader economy. For now, Judge Nelson’s decision stands as a reaffirmation that the interests of consumers and workers remain central to antitrust efforts.

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