The $25 billion Kroger-Albertsons merger has been blocked — for now

Update (Dec. 4, 2024): A day after the Kroger-Albertsons merger was blocked in court, Albertsons announced that it would terminate its merger agreement with Kroger.

A federal judge has — for the time being — blocked a proposed $25 billion merger between the grocery chains Kroger and Albertsons. Kroger is the parent company for grocery stores including Ralphs, Fry’s, Pay Less, Harris Teeter, Fred Meyer and more; Albertson’s, meanwhile, includes supermarkets like Pavilions, Shaw’s and ACME, among others.

The Federal Trade Commission and eight states believe the merger will hurt competition and possibly raise grocery prices, although some of Kroger-Albertson’s competition is bigger still. For more, we called up Erik Gordon, a professor at the University of Michigan’s Ross School of Business with an expertise in antitrust law. The following is an edited transcript of Gordon’s conversation with “Marketplace Morning Report” host David Brancaccio.

David Brancaccio: The competitive landscape there is interesting. Sure, those two companies getting together will make a much bigger grocery chain, but there’s some big grocery chains out there.

Erik Gordon: Yeah, you know, when you combine Kroger and Albertsons, they will have less market share than Walmart has, and that’s the argument of the companies. The argument of the companies is when you say “How much harm is done to competition?” “Look, we’re still not going to be No. 1. In fact, this lets us compete better with No. 1.” But what the government said and the judge bought was that no, supermarkets are different than Walmart. Even though you can buy groceries in both, it’s a distinct market. And in antitrust law, whoever wins the definition of a market wins the case.

Brancaccio: Let’s see how things play out. There’s a change of administration, in fact, and President[-elect] Trump overnight has named a conservative, Andrew Ferguson — who’s already on the Federal Trade Commission — to replace Lina Khan as chair at the FTC. That could change the view of this merger?

Gordon: Yeah. I think there will be big changes in antitrust, but antitrust under the Trump administration is going to be sort of a wild card. This isn’t a tech case. I mean, this is grocery stores. What’s plainer than that? And the Trump administration might be more sympathetic to the argument that the merger allows these companies to compete better with giants like Walmart and Amazon.

Brancaccio: Now, the present outgoing Chair of the FTC, Lina Khan, has not hesitated to try to curb tech company power and block mergers, in general, that officials see as anticompetitive. But with the new chair coming in, can you think tech companies breathe more easily?

Gordon: I don’t think they’re going to breathe more easily. They’re going to stay awake at night, because the Trump administration has said, more or less, “Look, we hate a lot of the stuff you do.” So I think a lot of companies are going to be happy about the new antitrusters, but not the tech people.