Two judges block Kroger-Albertsons merger, as Colorado waits for decision in its own antitrust case

The proposed $24.6 billion merger between grocery giants Kroger and Albertsons is now on hold after a federal judge in Oregon ruled Tuesday to temporarily halt the merger.

U.S. District Court Judge Adrienne Nelson, in a decision reported by the Associated Press, agreed to a preliminary injunction to give the Federal Trade Commission more time to consider the merger’s implications. 

The decision comes after a three-week hearing that began in late August. That lawsuit was initiated by the Federal Trade Commission, which opposes the merger because it would be bad for consumers and grocery employees. This kicks it back to the FTC for approval, although Kroger and Albertsons have asked for a different judge, AP reported.

Later on Tuesday, a judge in a similar suit in Washington state issued a permanent injunction. That leaves Colorado, which sued to block the merger in February and is now waiting for a decision. 

Attorney General Phil Weiser said he felt good about Colorado’s chances.

“We wait for a ruling in our case, and we are optimistic that this illegal merger will be permanently blocked,” Weiser said in a statement.

In Colorado, Kroger owns 118 King Soopers and 32 City Markets stores around the state. Kroger would keep those and acquire 14 Safeway locations. To gain regulator approval, the merger would divest an additional 91 Albertsons-owned Safeways in Colorado to New Hampshire-based C&S Whole Grocer. 

Nationwide, the union would increase Kroger’s size to nearly 5,000 grocery stores in all but two states. C&S would buy 579 stores to build a new retail business. 

About two weeks before the FTC sued in U.S. District court in Oregon to block the merger, Weiser filed an antitrust lawsuit alleging that the two companies had already demonstrated anticompetitive behavior during the King Soopers worker strike in January 2022, when management discussed not poaching striking workers or marketing to King Soopers pharmacy customers who were trying to avoid crossing the picket line. 

During a nearly four-week hearing that wrapped up in late October, Colorado attorneys said Kroger also raised prices in mountain towns where there was little grocery competition.

Kroger attorneys pushed back on allegations of anticompetitive behavior and said its prices, which are 10% lower than Albertsons, is better for consumers. They also no longer just compete against other local grocery stores, but companies like Walmart, Amazon and Costco.

Albertsons and Kroger officials called the decisions disappointing. 

“We believe we clearly outlined during the proceedings how the proposed merger would expand competition, lower prices, increase associate wages, protect union jobs, and enhance customers’ shopping experience. We are carefully reviewing the court’s opinion and are evaluating our options in accordance with the merger agreement,” the officials said in a statement shared by Albertsons.

A Kroger spokesperson said the decisions overlook the company’s “decades-long commitment to lowering prices” and its plan to invest $1 billion to lower prices at the Albertsons stores it seeks to acquire. Of that, the company said $40 million will be spent in Colorado.

“The company is currently reviewing its options,” a Kroger spokesperson said. 

In Colorado, there’s already a preliminary injunction until the judge rules on the case, said Lawrence Pacheco, a spokesperson for the AG’s Office. 

“The federal ruling is a nationwide preliminary injunction so that benefits Colorado, too,” he said. “We still have our no-poach, no-solicitation claim in our lawsuit, which is unique to Colorado.”

The Colorado case is in the hands of Denver District Court Judge Andrew J. Luxen, who was appointed by Gov. Jared Polis in 2022. On the last day of the case, Luxen said that if a decision came down from the FTC or Washington state, he’ll hold a conference with all the sides. He did not say when he would rule on the case.