The merger between American grocery retailers Kroger and Albertsons will not see the light of the day. The coalition, worth $25 billion, was blocked by a Federal and a King County judge.
According to Forbes, this decision has been victorious for various stakeholders like small-scale suppliers, grocery workers, consumers, and the Federal Trade Commission (FTC).
However, after the merger was blocked by the judge, Albertsons filed a case against Kroger citing the latter’s failure to win regulatory approval.
The accusation also involved violating the merger agreement by refusing to divest the assets required for antitrust approval, disregarding input from regulators, rejecting proposed buyers for the divested assets, and failing to collaborate effectively.
According to FTC, the merger would have led to price inflation and would also eliminate the existing competition by weakening the bargaining power of the union.
In defense, Kroger and Albertsons argued that the merger was necessary to boost their competition with other retail giants like Walmart and Amazon. As a result of this merger, more than 5000 stores would have been established.
The two retailers were ready to spend as much as $1 billion towards the merger. However, the same amount could have been used to lower the rising price of items, as per reports.
One of the stakeholders, the Institute of Local Self Reliance, which stood in opposition to the merger lauded the court’s decision as a historic ruling.
Meanwhile, the UFCW local unions leading the Stop the Merger coalition issued a statement asserting that the court decisions confirmed their long-held belief that the merger would harm workers, shoppers, and communities.
They emphasized its negative impact on fair wages, workplace safety, consumer choice, competitive pricing, and fair negotiations for farmers and suppliers.
Albertsons reportedly seeks $600 million from Kroger as damages
As per MSN, the Idaho-based grocery company will seek $600 as termination fees. Besides that, it also aims to pursue billions of dollars as damages to make itself and the shareholders whole.
The company’s spokesperson Tom Moriarty expressed disappointment with the ruling, stating that the company had presented a strong case during the proceedings, emphasizing how the proposed merger would promote competition, reduce prices, raise employee wages, safeguard union jobs, and improve the shopping experience for customers.
Spread throughout 22 states, the two companies are rivals in terms of pricing, quality, private label products, and other aspects. The FTC and Washington State argued the merger would lead to higher prices for consumers and reduced hiring competition, potentially harming workers.
The 2022 merger proposal involved Kroger acquiring Albertsons’ shares for approximately $34.10 each, with plans to invest $1 billion in employee wages and benefits.
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Kroger, operating primarily in the West, Midwest, and South, sought to combine with Albertsons, whose stores span the West, Midwest, and East under brands like Safeway and Acme.
Kroger reported $618 million in quarterly net income against Albertsons’ $145.5 million. The FTC sued earlier this year, alleging the deal was anticompetitive, citing internal acknowledgments that competition between the two helped maintain low prices and competitive wages.
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