Kroger Sues FTC Over Planned $25B Merger With Albertsons

A Kroger Store In Shepherdsville, Kentucky

Kroger Co., the parent company of King Soopers, this week filed a lawsuit against the Federal Trade Commission over the agency's effort to block a proposed $24.6B merger between King Soopers and Albertsons.

In its lawsuit, Kroger challenged the FTC’s actions against the merger as unconstitutional.

In a press statement, the company said the FTC was violating “Kroger’s private rights to contract with another party administratively through the Executive Branch, rather than in the independent Judicial Branch.”

Kroger said that standard was reinforced by the Supreme Court in its ruling in June limiting the enforcement powers of federal regulatory agencies.

Kroger also sold $10.5B worth of bonds this week to finance the merger, Bloomberg reported, citing an anonymous source. The deal is the fifth-largest U.S. investment-grade bond sale so far this year, according to Bloomberg.

Christine Bartholomew, a professor of law and vice dean of academic affairs at the University at Buffalo School of Law, told The Washington Post the challenge by Kroger puts the legal dispute into “deep, deep uncharted waters.”

“This is an attack on the legitimacy of the Federal Trade Commission,” Bartholomew told the Post.

She also said the Kroger lawsuit could be an indication that Kroger no longer plans to divest some of its properties, as it said it would earlier this year to ease regulatory concern about monopolies.

The Kroger lawsuit also suggests the company is preparing for an early appeal, according to Bartholomew.

In addition to the FTC's administrative proceeding to stop the merger, federal lawsuits have been filed by attorneys general in Colorado and Oregon. As part of the Colorado suit, a Denver district judge issued a preliminary injunction, which placed any merger plans on pause until a decision is reached.

Hearings in the Colorado suit are scheduled to start Sept. 30. It seeks to block the proposed $24.6B merger of two of the largest supermarket chains in Colorado.

“I am convinced that Coloradans think this merger between the two supermarket chains would lead to stores closing, higher prices, fewer jobs, worse customer service, and less resilient supply chains,” Colorado Attorney General Phil Weiser said when the suit was filed.

Along with the Colorado legal challenge, a federal court in Oregon is expected to begin its trial next week on the FTC’s requested halt to the proposed merger.

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