After concluding that the Federal Trade Commission’s worries regarding the merger’s potential effects on market consolidation were legitimate, a U.S. District Judge in Oregon halted grocery giant Kroger’s $25 billion attempt to acquire rival Albertsons.
Judge Adrienne Nelson declared on Tuesday afternoon that consumers would suffer if the two businesses merged.
The two businesses “engage in substantial head-to-head competition and the proposed merger would remove that competition,” according to Ferguson’s letter. Therefore, the proposed merger is “presumptively unlawful” since it is likely to result in consequences that “unilaterally” injure consumers.
Judge Ferguson also decided that the merger would be detrimental to workers, stating that workers’ bargaining strength would be diminished by greater consolidation.
Requests for comment were not immediately answered by Albertsons and Kroger representatives. Cincinnati-based Kroger has stated that a court decision such as this one would essentially put a stop to the merger.
On Tuesday, Kroger’s stock ended the day up 5%, while Boise-based Albertsons’ stock ended the day 2% lower.
In order to stay competitive with big box stores like Walmart, Target, and Amazon, which have greatly expanded their grocery businesses, Kroger had maintained that the agreement was essential.
However, according to Nelson, “supermarkets” continue to constitute a unique, niche market within the American consumer landscape, and the effects of the proposed merger need to be taken into consideration.
For the Biden administration, and particularly for FTC Chair Lina Khan, who has adopted an unprecedentedly tough stance in opposing mergers that could result in monopolies, the verdict is a success.
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