US court blocks Kroger’s US$25 billion supermarket mega-merger

A US judge suspended supermarket giant Kroger’s planned US$24.6 billion acquisition of rival chain Albertsons on Tuesday in a win for the Federal Trade Commission, which had argued the deal would harm consumers.

The order for a temporary block follows a three-week trial in Portland, Oregon, and deals a significant blow to what would have been one of the largest retail grocery deals in US history.

“Plaintiffs are likely to succeed on the merits and the equities weigh in favour of an injunction,” US District Judge Adrienne Watson wrote in a court filing confirming the preliminary injunction, which delays the deal but does not kill it.

The FTC had argued the acquisition would lead to higher prices for groceries and other essential household items for millions of Americans.

The judge rejected the companies’ arguments that the merger would generate billions in cost savings and lead to lower prices for consumers, finding these claims were “neither merger-specific nor verifiable.”

“Today’s win protects competition in the grocery market, which will prevent prices from rising even more,” FTC spokesperson Douglas Farrar wrote in a statement shared with AFP after the injunction was granted.

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The injunction makes clear, he added, “that strong, reality-based antitrust enforcement delivers real results for consumers, workers, and small businesses.”

Neither Kroger nor Albertsons immediately responded to requests for comment.

“The Kroger-Albertsons deal always faced an uphill battle in its bid for approval,” GlobalData managing director Neil Saunders wrote in a note to clients. “While some of the FTC’s arguments were debatable, it operated from a position of strength”

“For both firms, it is now a case of putting this distraction behind them and going back to the drawing board,” he added. AFP

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