A critical hearing over Kroger ’s proposed $25 billion takeover of Albertsons is beginning to wind down in a federal court . So what’s next?
Closing arguments pending
With the hearing tentatively scheduled to end on Friday, closing arguments are expected in the next few days. Those remarks will be made by attorneys for Kroger and Albertsons as well as the regulators with the Federal Trade Commission , which is seeking to kill the deal. The hearing is to determine whether to grant the government’s request for a court order to halt the merger as it pursues another case in Washington, D.C. to stop the deal.
Judge will make ruling
Once closing arguments are given, it’s up to U.S. District Court Judge Adrienne Nelson to decide whether to grant the preliminary injunction. It’s possible she could rule immediately, but she could also close the hearing saying she will issue her decision in a specified amount of time or simply at a later undetermined date.
The implications
The stakes are high: during opening arguments, an attorney for Kroger said if the company lost the ruling, the merger “will not occur.” Antitrust experts have noted many mergers that lose preliminary injunction battles are abandoned because fighting on would mean lengthy and expensive legal battles. Antitrust experts also say the government could give up or continue to fight the merger without the injunction.
Appeals fight
Regardless of the decision, either side could fight an unfavorable ruling in the U.S. Court of Appeals for the Ninth Circuit .
Further legal battles
While several states have signed onto the federal case as plaintiffs, Colorado and Washington are suing in state courts to fight the merger. Both cases, making many similar arguments in the federal case, are scheduled to begin this month.
Besides the federal case, antitrust experts have said a loss in either of the state courts could jeopardize the merger because the deal doesn’t have a provision to carve out state operations and even if it did, the deal might not be acceptable to the retailers.
How big is this deal?
First announced in October 2022, Cincinnati-based Kroger wants to buy all outstanding shares of Boise, Idaho-based Albertsons, adding most of its employees and stores to its supermarket operation. To reassure concerns about maintaining competition, Kroger has agreed to sell off 579 stores to a C&S Wholesale Grocers , a New Hampshire-based competitor that is mostly a supplier but also operates about two dozen retail supermarkets, including Piggly Wiggly.
Upon completion, Kroger would operate more than 4,400 supermarkets (up from 2,700) generating about $208 billion in annual sales (compared to $150 billion before). If approved Kroger would employ about 640,000 workers (up from about 414,000 currently), which could make it one of the 10-largest private employers in the world.
Promises and concerns
Kroger says the deal will help it become more efficient and stay competitive against the likes of Walmart, Costco and Amazon and has promised to cut grocery prices by $1 billion if the merger is approved. Kroger and Albertsons have also said jobs and stores will be preserved.
But regulators at both federal and state level have expressed deep concerns. They are worried C&S Wholesale Grocers' limited experience as a retailer will prevent it from being a strong competitor and that could lead to higher prices for consumers. They are also worried about the job security of the 60,000 workers that could be moved to C&S Wholesale Grocers.
Stay tuned ...
To keep closer tabs on the court's developments, The Enquirer is sending business reporter Alex Coolidge to Portland.
For the latest on Kroger, P&G, Fifth Third Bank and Cincinnati business, follow @alexcoolidge on X (formerly Twitter).
This article originally appeared on Cincinnati Enquirer: Kroger Albertsons merger hearing: What's next?
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