The Federal Trade Commission (FTC) and a coalition of nine state attorneys general (AG) filed a lawsuit on February 26, in the U.S. District Court for the District of Oregon seeking a preliminary injunction to stall Kroger Company’s (Kroger) proposed $24.6 billion acquisition of Albertsons Companies (Albertsons), citing concerns that the proposed deal would eliminate competition among the supermarket giants, leading to higher grocery prices for millions of Americans. FTC commissioners voted unanimously to authorize the lawsuit, which was joined by AGs from Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon, and Wyoming. Simultaneously, the FTC filed an administrative complaint against Kroger and Albertsons to block the proposed transaction.

The decision comes despite Kroger’s and Albertsons’ proposal to divest more than 413 stores nationwide to C&S Grocers (C&S) in an effort to satisfy competition concerns. The FTC expressed doubts that the proposed divestiture would allow C&S to meaningfully compete with Kroger’s market share, as C&S would “face significant obstacles stitching together the various parts and pieces from Kroger and Albertsons into a functioning business.”

According to Henry Liu, director of the FTC’s Bureau of Competition, “Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today. Essential grocery store workers would also suffer under this deal, facing the threat of their wages dwindling, benefits diminishing, and their working conditions deteriorating.”

The FTCs announcement comes after AGs in Washington and Colorado announced two separate legal challenges to block the proposed merger, which they allege violates Washington’s Consumer Protection Act and Colorado’s State Antitrust Act, respectively. The Colorado lawsuit also alleged Kroger and Albertsons improperly entered into no-poach and no-solicitation agreements after a strike at a chain of stores owned by Kroger.

In the Washington complaint, AG Bob Ferguson contends the divestiture does not change the fact that one grocer would still enjoy a near monopoly in the state. Kroger and Albertsons make up nearly 50% of all grocery stores in Washington. If approved, the deal would be Washington’s second major retail grocery store merger in recent years, following the 2015 merger of Albertsons and Safeway. The Colorado lawsuit echoes a similar sentiment while seeking $1 million in civil penalties for the agreements, and seeks to enjoin the companies from enforcing or further entering into such agreements.

The future of these state lawsuits is unclear given the FTC’s decision to move to block the merger in federal court. It is possible that the states or the courts may stay the lawsuits pending the outcome of the FTC’s suit.

On the other hand, Washington and Colorado may continue to pursue their individual actions. If successful on the merits, the Washington and Colorado lawsuits could have a nationwide impact on the merger. A decision in favor of the states may also cause the companies to abandon the merger altogether, as has often happened in the past.

Regardless of the ultimate future of these state court actions, the message is clear: the FTC and state AGs will continue to aggressively enforce antitrust laws.

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