MICHEL MARTIN, HOST:
It's a one-two punch for the grocery megamerger of Kroger and Albertsons.
A MARTÍNEZ, HOST:
Yeah. Two separate judges have blocked the $25 billion grocery deal. It would have been the biggest in U.S. history, but now it's fate is up in the air.
MARTIN: NPR's Alina Selyukh is here with more. Good morning, Alina.
ALINA SELYUKH, BYLINE: Good morning.
MARTIN: OK. So two judges ruling at once. How'd that happen?
SELYUKH: Yeah. It was a federal judge in Oregon and a state judge in Washington - two separate cases. They just ruled within about an hour of each other. Just so happened. The state judge ruled the merger violates state consumer protection law. The federal case blocked the merger nationwide. And technically, the block is temporary, and technically, Kroger and Albertsons can keep fighting. They can appeal both rulings. They have, however, been at it for over two years, and this double whammy of legal losses is really looking like it could be a death knell for the merger.
MARTIN: Wow. Two years. So remind us the details of this deal.
SELYUKH: Yeah. It was in late 2022 when Kroger first said it would buy Albertsons for nearly $25 billion. This would combine the two biggest supermarket chains in the U.S. You might actually know these chains under different names. Kroger runs Ralphs, Harris Teeter, Fred Meyer, King Soopers, others. Albertsons own Safeway, and Vons - thousands of stores. They knew this merger would be a tough sell for regulators, and immediately, they said, we're ready to fight in court, bring it on, and that is what happened. They got sued three times by Colorado - which is still pending - by Washington and by the Federal Trade Commission, along with a bunch of states, all asking courts to block the merger.
MARTIN: Tell us more about the arguments in court.
SELYUKH: So government lawyers argued Kroger and Albertsons often compete head-to-head. They keep tabs on each other's prices, store hours, quality of products, and that, you know, putting two rivals under one roof would leave shoppers worse off - fewer choices, higher prices. Now, Kroger and Albertsons made the case that the merger, for them, was a matter of survival - that their biggest rivals are not conventional supermarkets like each other, but giants like Walmart, Costco, Amazon. They said, only together could they actually compete with these companies long term. They argued that together, they could actually have more power to lower prices for shoppers.
MARTIN: And evidently, the judges did not buy that argument.
SELYUKH: They did not. The U.S. district judge wrote essentially that she understood that competition with Walmart is real and it's tough, but it cannot justify an otherwise illegal merger. The judges also did not buy the company's plan to create essentially a new rival for themselves. That was a plan that Kroger and Albertsons had for markets where they currently overlap. They'd proposed selling hundreds of stores in those areas to another company to run as a new competitor chain. The federal judge, in particular, found that company was inexperienced and was not getting set up for success.
MARTIN: So apologies if I'm asking you to speculate, but does this mean that this is the end of the merger?
SELYUKH: Well, so what we know so far from the companies, they've just said they are disappointed, they disagree with the courts and that they are evaluating their options. But there is a pretty high chance Kroger walks away, which would then mean Albertsons would probably put itself up for sale again, try to find someone else to buy it. And overall, you know, this has been - it's been two years. It has been very expensive and a fairly unpopular deal, criticized by both Democrats and Republicans. Shoppers using it to air grievances about expensive groceries. And for now, those shoppers can keep going back to their familiar grocery stores.
MARTIN: That is NPR's Alina Selyukh. Alina, thank you.
SELYUKH: Thank you.
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