The proposed merger between supermarket giants Kroger and Albertsons floundered on Tuesday after judges overseeing two separate cases both halted the deal.
U.S. District Court Judge Adrienne Nelson issued a preliminary injunction blocking the merger Tuesday after holding a three-week hearing in Portland, Oregon.
Later Tuesday, Judge Marshall Ferguson in Seattle issued a permanent injunction barring the merger in Washington after concluding it would lessen competition in the state and violate Washington’s consumer-protection laws.
Kroger and Albertsons said Tuesday they are disappointed in the decisions and are reviewing their options. The companies could appeal, although the deal could fall apart in the time it would take for those cases to be considered.
“For the parties, the road gets steeper from here, just given the costs of keeping a deal together and the significant doubts about its viability given today’s opinion,” said Jeffrey Oliver, a partner specializing in antitrust law at the law firm Baker Botts.
Kroger and Albertsons in 2022 proposed what would be the largest grocery store merger in U.S. history. The companies said a merger would help them better compete with big retailers like Walmart, Costco and Amazon.
But the Federal Trade Commission sued earlier this year, asking Nelson to block the $24.6 billion deal until an in-house administrative judge at the FTC could consider the merger. Attorneys general from Arizona, California, Illinois, Maryland, Nevada, New Mexico, Oregon, Wyoming and the District of Columbia joined the FTC’s lawsuit.
Nelson agreed to pause the merger, saying that the FTC had shown it was likely to prevail in the administrative hearing.
“Any harms defendants experience as a result of the injunction do not overcome the strong public interest in the enforcement of antitrust law, especially given the difficulty in disentangling a premature merger,” she wrote in her opinion.
The FTC called Nelson’s decision “a major victory for the American people” that will protect them from higher grocery prices. In Washington, Governor-elect Bob Ferguson, who brought the case against Kroger and Albertsons as the state’s attorney general, called the state court’s decision “an important victory for affordability, worker protections and the rule of law.”
Federal regulators argued that combining the two chains would be bad for consumers and workers by eliminating competition.
A coalition of United Food and Commercial Workers local unions representing more than 100,000 Kroger and Albertsons employees applauded the court decisions Tuesday.
“This mega-merger would be bad for workers who deserve a workplace where they can be paid well for their labor, be safe and be respected,” the unions said.
Kroger had promised to invest $1 billion in lower grocery prices, an additional $1 billion in higher grocery worker wages and $1.3 billion to improve Albertsons stores. But Nelson wasn’t swayed.
“The promise to make a price investment is not legally