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Kroger has taken legal action against the Federal Trade Commission (FTC) in an effort to stop the regulator from blocking its $24.6 billion merger with Albertsons. The lawsuit, filed in federal court in Cincinnati, challenges the FTC's attempt to use administrative proceedings to prevent the deal, arguing that such a move is unconstitutional.
In October 2022, Kroger announced its plan to acquire Albertsons, a move intended to strengthen its position in the competitive grocery industry.
Kroger-Albertsons Merger Blockade
The merger is seen as a strategic response to competition from major players like Amazon and Walmart. However, in February, the FTC sued to block the merger, claiming it would harm competition and lead to higher food prices for consumers. The FTC is seeking a temporary block on the deal while it conducts an in-house review.
According to Biz Journals, Kroger's lawsuit argues that the FTC's use of administrative courts is a violation of constitutional principles. The company is asking for an immediate halt to the FTC's proceedings, citing recent Supreme Court decisions that have limited federal agencies' powers in similar contexts.
These rulings have impacted agencies like the Securities and Exchange Commission (SEC), which faced restrictions on using internal legal tribunals.
Christine Bartholomew, a law professor at the University at Buffalo, notes that Kroger's lawsuit is a bold effort to challenge the FTC's authority. She suggests that Kroger's legal strategy might be aimed at gaining leverage in negotiations or preparing for a possible appeal. If the FTC were to pursue the case in federal court instead of using its own administrative process, Kroger's argument could be weakened.
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Merger Faces Legal Challenges
Daniel McCuaig, an antitrust lawyer, highlights that Kroger's lawsuit is among the first to emerge following the Supreme Court's June ruling, which impacted the SEC's enforcement practices. This ruling could affect the FTC, which relies heavily on in-house courts. Kroger's legal team argues that private rights, such as property rights, should be handled exclusively by federal courts, not by administrative bodies.
According to Bloomberg, the merger between Kroger and Albertsons is also facing scrutiny in other legal venues. Along with the FTC's administrative trial, there are federal court challenges in Oregon and state lawsuits in Colorado and Washington. Last year, consumer groups attempted to sue over the deal but were unsuccessful. The merger remains in limbo as it awaits resolution in these ongoing legal battles.
Both Kroger and Albertsons argue that the merger would improve their competitive stance against major retailers and benefit consumers. However, the FTC is concerned that the deal could reduce competition, increase leverage over workers, and negatively impact wages.
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