Two years ago, grocery giant Kroger proposed a $25 billion deal to acquire rival chain Albertsons. However, the Federal Trade Commission (FTC) wants to delay the merger while it takes some time to review it. Fearing that such an internal review would take years, Kroger hit back with a lawsuit.
Kroger calls the FTC’s actions unconstitutional and wants a Cincinnati court to halt the regulator’s internal review and let a federal court decide the legality of the merger. Kroger has a pending federal case that is scheduled to be heard on Aug. 26. If a court reviews the deal as opposed to the FTC’s internal judges, Kroger may have a better chance of getting the merger approved.
“We urge the court to stop this essentially unlawful proceeding before the FTC’s internal tribunal,” Kroger Chairman Rodney McMullen said, according to the New York Post.
Earlier this summer, the U.S. Supreme Court issued a major ruling that significantly limited the enforcement powers of some federal agencies. The decision could affect Kroger’s court case in Cincinnati and effectively pause the FTC’s request to review the merger agreement internally.
“We’re in uncharted waters here,” said Christine Bartholomew, a law professor and associate dean for academic affairs at the University at Buffalo School of Law, according to the Washington Post. “This is an attack on the legitimacy of the Federal Trade Commission.”
To compete with retail giants Amazon and Walmart, Kroger announced plans to buy Albertsons in October 2022, which would bring its store count to over 4,000. As part of the deal, Kroger promised to raise employee wages and cut prices by $1 billion, double the company’s original offer of $500 million.
The FTC argues that the merger will result in higher prices for consumers and disadvantages for workers. According to the regulator, the grocery giant would have more influence in negotiating employment conditions and less motivation to improve quality. The FTC has not yet commented on the lawsuit recently filed by Kroger.
