A U.S. District Judge in Oregon has blocked a $25 billion-bid by supermarket giant Kroger to take over rival Albertsons after ruling that the Federal Trade Commission’s concerns about the merger’s impact on market consolidation were valid.
Judge Adrienne Nelson said Tuesday afternoon that a merger between the two companies would end up harming consumers.
The two companies “engage in substantial head-to-head competition and the proposed merger would remove that competition,” Ferguson wrote. As a result, the proposed merger would likely to lead to outcomes that “unilaterally” harm consumers, and is thus “presumptively unlawful. “
Judge Ferguson also ruled the merger would be bad for workers, arguing increased consolidation would reduce workers’ bargaining power.
Representatives for Albertsons and Kroger did not immediately respond to requests for comment. Kroger, based in Cincinnati, has said a court ruling like this one would effectively scuttle the merger.
Kroger shares closed up 5% Tuesday, while shares of Albertsons, based in Boise, finished 2% lower.
Kroger had argued the deal was necessary for it to continue to compete with big box retailers like Walmart and Target, as well as Amazon, that have significantly grown their grocery businesses.
But Nelson said that “supermarkets” still represent a distinct, niche market within the U.S. consumer landscape whose impacts from the proposed merger must be accounted for.
The ruling represents a victory for the Biden administration and especially FTC Chair Lina Khan, who has taken an unprecedentedly aggressive approach toward countering mergers likely to create monopolies.
