Kroger Continues Legal Maneuvering Ahead of FTC Trial
As the federal court hearing between The Kroger Co. and the Federal Trade Commission (FTC) draws closer, the grocer has filed a motion for preliminary injunction against the FTC’s administrative hearing that challenges its proposed merger with Albertsons Cos. That administrative tribunal is separate from the federal proceeding that is set to begin in the District of Oregon on Aug. 26.
When the FTC formally filed suit to block the merger in February, it split its challenge into two parts: one stating that the merger would violate both the Clayton Act and the FTC Act, and the other seeking a temporary restraining order and preliminary injunction to prevent Kroger and Albertsons from consummating the merger until final resolution of the administrative proceeding.
This latest motion from Kroger alleges that the FTC is violating Constitutional protections if it proceeds with its administrative tribunal, in addition to the separate action in federal court. Specifically, Kroger says that the FTC’s administrative proceeding against the merger violates Articles II and III of the Constitution because the Administrative Law Judge presiding over that proceeding is not removable by the President of the United States, and because it seeks to adjudicate Kroger’s private rights to contract with another private party administratively through the Executive Branch rather than in the independent Judicial Branch.
Additionally, according to a Kroger spokesperson, by splitting its challenge to the merger into two separate tribunals, the FTC is making “an inappropriate attempt to receive multiple opportunities to litigate the same issues.”
Continued the spokesperson: “Despite forcing Kroger to participate in this unconstitutional administrative proceeding, the FTC has also filed a motion in the federal court proceedings seeking to block the merger for the duration of its administrative proceeding – which will likely take several years to resolve.”
Kroger is instead asking to enjoin the two proceedings instead of holding them separately. Currently, a date for the administrative hearing has not been set, but will be decided after the federal trial concludes on Sept. 13.
"The merger between Kroger and Albertson's is squarely focused on ensuring we bring customers lower prices starting day one while securing the future of good-paying union jobs," said Rodney McMullen, Kroger chairman and CEO. "We stand prepared to defend this merger in the upcoming trial in federal court – the appropriate venue for this matter to be heard – and we are asking the Court to halt what amounts to an unlawful proceeding before the FTC's own in-house tribunal."
Earlier this month, the FTC made a motion for a preliminary injunction against the proposed merger, seeking “extraordinary relief” to stop the companies from proceeding with their planned tie-up. According to Kroger, however, the FTC has failed to satisfy its burden to show that an injunction is permissible or warranted.
According to Kroger, the government’s motion for the preliminary injunction fails to meet the threshold requirements under the Clayton Act, and in response to the FTC’s challenge stated that it must “expand, adapt, and most importantly, continue to lower prices to compete with global behemoths. Simply put, modern competition for groceries and ‘household goods’ extends far beyond Kroger and Albertsons, and Kroger must embrace this reality to compete effectively and offer consumers the lowest possible prices, while offering better paid jobs to union workers.”
Meanwhile, a preliminary injunction against the merger was granted by Denver District Court Judge Andrew J. Luxen during a hearing on July 25 in regard to a separate lawsuit filed by Colorado Attorney General Phil Weiser. A two-week trial on the matter is set to begin on Sept. 30, and a Kroger spokesperson told Progressive Grocer that the decision was welcome news since it eliminated the need for a preliminary injunction hearing, which had been originally slated for Aug. 12.
Cincinnati-based Kroger is No. 4 on The PG 100, Progressive Grocer’s 2024 list of the top food and consumables retailers in North America. View company website. Boise, Idaho-based Albertsons is No. 9 on The PG 100. View company website. PG also named Kroger and Albertsons among the Retailers of the Century.
