Kroger sues Federal Trade Commission, says in-house judge review is unconstitutional

DENVER ( KDVR ) — King Soopers’ parent company, Kroger Co. , filed a lawsuit Monday against the Federal Trade Commission, alleging that the federal agency is violating two of the U.S. Constitution’s separation-of-powers mandates.

The lawsuit, filed in Cincinnati, is in response to the FTC filing an administrative complaint against Kroger and Albertsons, which have proposed a $24.6 billion merger in 2022 to “better compete against established and growing industry giants,” including Walmart and Costco, according to various lawsuits.

Kroger is alleging that the FTC’s use of an in-house tribunal to review the proposed merger is unconstitutional and asserted that the matter should be addressed in federal court.

The FTC filed the lawsuit in February in the U.S. District Court of Oregon to block the merger until an administrative law judge with the FTC can review the merger to ensure it is in the public’s interest. However, Kroger says the review could last the same time as the federal proceedings, which “likely will take several years to result in a final decision.”

Kroger stated that an administrative law judge overseeing the FTC’s review is in violation of Article II of the Constitution because the judge “enjoys two layers of protection against removal.”

“The Supreme Court has held that more than one layer of removal is unconstitutional,” the lawsuit states.

The FTC is seeking to block the merger of the two grocery giants because of concerns that the joining of the two companies would eliminate competition and lead to higher prices for American citizens. Colorado Attorney General Phil Weiser also sued to block the merger earlier this year, for similar reasons.

Kroger alleged in its lawsuit that the FTC’s administrative proceedings violate Article III of the Constitution, “because the FTC intends to adjudicate Kroger’s private rights within the partisan Executive Branch rather than the independent Judiciary.” The lawsuit went on to claim that the Supreme Court has consistently recognized private rights are judged in federal courts.

Kroger also said that the administrative proceeding “usurps judicial power,” as the FTC is seeking to prevent “any transaction” between Kroger and Albertsons unless the FTC has approved it. The grocery provider said this request will limit Kroger’s contractual and property rights, which it said are “core private rights.”

Kroger is seeking an injunction against the FTC and to have their case joined with the federal case that is set to be heard in the U.S. District Court of Colorado in a two-week proceedings scheduled for Sept. 30.

The lawsuit was filed only days after the company announced plans to invest $1 billion to “further” reduce prices in its stores if the merger with Albertsons is approved.

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