The proposed merger between supermarket giants Kroger and Albertsons floundered on Tuesday after judges overseeing two separate cases each ruled to block it.
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 that it would lessen competition in the state.
Kroger and Albertsons in 2022 proposed what would be the largest grocery store merger in U.S. history. 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’s implications.
Nelson agreed to pause the merger.
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“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.
Federal regulators argue that combining the two chains would be bad for consumers and workers by eliminating competition. The companies say a merger would help them better compete with big retailers like Walmart, Costco and Amazon.
The case may now move to the FTC, although Kroger and Albertsons have asked a different federal judge to block the in-house proceedings. Colorado and Washington are also trying to halt the merger in ongoing state trials. The judge in Washington was expected to release his opinion later Tuesday.
The FTC argued that Kroger and Albertsons currently compete in 22 states, closely matching each other on price, quality, private label products and services like store pickup. A merger would eliminate that competition and raise prices for already struggling consumers, the government said. The FTC also said the merger would hurt workers since Kroger and Albertsons would no longer compete to hire them.
But Kroger and Albertsons argued their merger would preserve consumer choice by allowing them to better compete against its growing rivals. In its testimony, Albertsons warned Nelson that it might have to lay off workers, close stores and even exit some markets if the merger weren’t allowed to proceed.
Under the merger agreement, Kroger and Albertsons would sell 579 stores in places where their locations overlap to C&S Wholesale Grocers, a New Hampshire-based supplier to independent supermarkets that also owns the Grand Union and Piggly Wiggly store brands.
The FTC argued that C&S is ill-prepared to take on the stores and may want the option to sell or close them. But Kroger and Albertsons said C&S has the experience and national scale to handle the divestiture.
Kroger, based in Cincinnati, Ohio, operates 2,800 stores in 35 states, including brands like Ralphs, Smith’s and Harris Teeter. Albertsons, based in Boise, Idaho, operates 2,273 stores in 34 states, including brands like Safeway, Jewel Osco and Shaw’s. Together, the companies employ around 710,000 people.
The Star previously reported that eleven Southern Arizona Albertsons and Safeway stores could be sold in an effort to win approval for a merger.
The stores were on a list released on August of 101 Arizona locations that could be up for divestiture to C&S.
Albertsons stores on the list: 1350 N. Silverbell Road, north of Speedway; 9595 E. Broadway, near Harrison Road; and 7300 N. La Cholla Blvd., near Ina Road.
That would leave three Albertsons stores in the Tucson area: 2854 N. Campbell Ave., near Glenn Street; 5085 N. La Canada Dr., near River Road; and 6600 E. Grant Road, near Tanque Verde Road.
Safeway stores that made the list:
- 6360 E. Golf Links Road, near Wilmot Road
- 9050 E. Valencia Road, near Nexus Road
- 9460 E. Golf Links Road, near Harrison Road
- 9100 N. Silverbell Road, near Twin Peaks Road
- 13380 E. Mary Ann Cleveland Way, near Colossal Cave Road
- 1305 W. Duval Mine Road, near La Cañada Drive, in Green Valley
- 12122 N. Rancho Vistoso Blvd., near Tangerine Road, in Oro Valley
- 2190 E. Fry Blvd. in Sierra Vista
That would leave 10 Safeway locations in the Tucson area: 1940 E. Broadway, near Campbell Avenue; 1551 W. St. Mary’s Road, near Silverbell Road; 2140 W. Grant Road, near Silverbell Road; 1767 E. Prince Road, near Campbell Avenue; 2940 W. Valencia Road, near Cardinal Avenue; 4752 E. Sunrise Drive, near Swan Road; 7177 E. Tanque Verde Road, near Sabino Canyon Road; 7110 N. Oracle Road, near Ina Road; 9125 E. Tanque Verde Road, near Catalina Highway; and 10380 E. Broadway Blvd., near Houghton Road.
No Arizona Fry’s locations were listed for possible divestiture.
