The Federal Trade Commission has prevailed in one of its biggest antitrust cases, with today's decision by a federal judge to block the Kroger-Albertsons merger.
“The FTC, along with our state partners, scored a major victory for the American people, successfully blocking Kroger’s acquisition of Albertsons," said FTC Bureau of Competition Director Henry Liu
The $24.6 billion deal would have added nearly 2,000 stores to Kroger's roster and U.S. District Judge Adrienne Nelson agreed with the FTC that it would have removed too much competition from the marketplace. Nelson presided over a trial in Portland, Oregon, this summer.
“Evidence shows that defendants engage in substantial head-to-head competition and the proposed merger would remove that competition,” Nelson wrote in the ruling.
"This historic win protects millions of Americans across the country from higher prices for essential groceries—from milk, to bread, to eggs—ultimately allowing consumers to keep more money in their pockets," the FTC's Liu said.
"This victory has a direct, tangible impact on the lives of millions of Americans who shop at Kroger or Albertsons-owned grocery stores for their everyday needs, whether that’s a Fry’s in Arizona, a Von’s in Southern California, or a Jewel-Osco in Illinois."
Necessary to compete
Kroger and Albertson had argued that the deal was crucial to their being able to compete effectively against Walmart and Amazon but Nelson bought the FTC's argument that the move was anticompetitive and would be harmful to consumers.
The decision follows a three-week trial in which the FTC argued that Kroger and Albertsons competed vigorously with each other and that they would have no incentive to do so if the merger went through.
The grocers argued that they have many other competitors and would have to be price-competitive with or without the merger.
Kroger is the biggest supermarket chain in the country, with about 9% of the market while Albertsons controls about 5%. They lag retail giant Walmart, and Costco is approaching Kroger's sales volume.
The companies had agreed to sell off some 579 stores to other operators if the deal went through. If the companies now abandon their effort, as they have said they will, Kroger will have to pay Albertsons a $600 million breakjup fee.