The ruling, citing a potential loss of competition, was a victory for the Federal Trade Commission. Later, a Washington State judge blocked the deal on similar grounds.
The biggest grocery store merger in U.S. history was dealt a double blow on Tuesday: Within less than two hours, both a federal and a state judge moved to block the deal.
Judge Adrienne Nelson of U.S. District Court in Oregon sided with the Federal Trade Commission in its lawsuit seeking to halt Kroger’s $24.6 billion acquisition of Albertsons, a rival grocery chain. It was a win for federal regulators who have argued that the merger would risk reducing competition at the expense of consumers and workers.
The grocery chains “engage in substantial head-to-head competition and the proposed merger would remove that competition,” Judge Nelson said in her decision, calling the merger “presumptively unlawful.”
Her preliminary injunction placed the merger on shaky ground as it heads to the final step to determine the deal’s fate: the F.T.C.’s internal administrative process. About an hour after the federal ruling, a judge in Washington State also blocked the deal on the grounds that it could substantially lessen competition. Another state challenge in Colorado is still pending.
Kroger and Albertsons could choose to abandon their merger because of the preliminary injunction, but the order at the federal level “in no way forces them to do so,” Judge Nelson added, stressing that the companies could still pursue the deal if it is deemed lawful in the F.T.C.’s administrative proceedings. “An injunction simply pauses the merger,” she said.
The ruling in the Washington State case, however, added to the hurdles facing the companies, which have argued that they need to merge in order to compete with behemoths like Walmart and Amazon.
