The Federal Trade Commission began a trial Monday to block the $25 billion merger of Kroger and Albertsons, telling a federal judge in Portland, Oregon, that the deal would eliminate competition between major grocery store chains and hit consumers’ wallets.
The FTC and several states filed suit in February to block the deal, arguing the merger would raise prices for consumers and weaken the bargaining power of unionized grocery store workers.
In opening statements Monday, FTC lead trial counsel Susan Musser said the deal would result in Kroger “swallowing up” Albertsons and asked U.S. District Judge Adrienne Nelson to halt the deal.
“Ending this multi-billion-dollar deal will help curb food price inflation and preserve the vibrant competition that drives improved quality and innovation,” she said.
Nelson is considering whether to halt the deal while an FTC in-house judge investigates how the deal could affect competition.
These reviews can take years, and companies often abandon suspended deals without completing the process.
Kroger and Albertsons are also scheduled to make their opening statements on Monday.
Kroger and Albertsons have asked a judge to allow the deal to go ahead, arguing the alliance is necessary to compete with multinational companies such as Walmart Inc., the largest U.S. grocery retailer, bulk-buying mainstay Costco Inc. and Amazon, which owns Whole Foods.
Kim Cordova, president of the Colorado and Wyoming chapters of the United Food and Commercial Workers union, expressed skepticism of the claims at a press conference outside the courthouse.
“We don’t believe the company’s promise that it’s doing this to compete,” she said.
The lawsuit is one of the Biden administration’s highest-profile efforts to lower prices for consumers and comes as rising food prices have become a major issue in the presidential election between Democratic candidate Vice President Kamala Harris and her Republican opponent, former President Donald Trump.
It also represents a key test of FTC Chair Lina Khan’s efforts to use antitrust law to boost worker wages and mobility.
The trial is expected to last about three weeks and will feature evidence about how large grocery retailers and smaller rivals view pricing and competition in the industry.
Kroger and Albertsons argue that the lawsuit’s focus on traditional supermarkets ignores that consumers typically buy groceries at a variety of places, including big-box stores like Target and dollar stores like Dollar Tree.
Kroger has said it would sell 579 of its roughly 5,000 stores if the deal is approved. The trial will focus on whether the buyer, C&S Wholesale Grocers, can successfully operate those stores.
Kroger also promised to cut grocery prices by $1 billion after the merger.
Retailers are lowering prices through a variety of means, including negotiating better deals with suppliers, investing in supply chain automation, and changing the way they label and package products.
Kroger declined to provide further details about its pricing investments, but a source familiar with the matter suggested price cuts will likely focus initially on essential and high-demand items.
“The plan initially will be to focus on a wide range of staple foods rather than, say, peanut butter spread,” the source said.
The states of Arizona, California, Illinois, Maryland, Nevada, New Mexico, Oregon, Wyoming and the District of Columbia are joining the FTC in this lawsuit.
Washington and Colorado have filed their own lawsuits to block the merger, which are scheduled to go to trial after the Oregon lawsuit.
All of these states have Kroger and Albertsons stores.
