A federal judge delivered a huge win to the departing Biden administration on Tuesday, ruling in favor of the Federal Trade Commission's action against the merger of the Kroger and Albertsons supermarket chains, reported the Wall Street Journal.
“Evidence shows that defendants engage in substantial head-to-head competition and the proposed merger would remove that competition,” Judge Adrienne Nelson ruled.
The Kroger and Albertsons merger plan raised alarm bells among economic and legal observers who feared that Kroger obtaining another 2,000 stores — roughly double its current total — would give it unprecedented power over the grocery market, stifling competition. The combined company would have had a larger number of locations than Walmart, and may have gained the power to drive up grocery prices. The FTC noted that in many states and cities, Kroger and Albertsons are currently each others' most direct competitors.
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Attorneys for the firms argued that the deal preserved competition by spinning off roughly 600 stores to another rival chain, C&S Wholesale Grocers, but Nelson rejected this argument.
During the trial, a Kroger executive admitted that the chain increased prices of eggs and milk above the wholesale price increases they faced from inflation, boosting their profits at the expense of consumers.
The outcome of the case is a massive victory for Lina Khan, the progressive FTC chair who has pursued an aggressive agenda of blocking corporate consolidations and preserving competition across a wide variety of industries. She has made enemies of a number of business titans, including some who backed Vice President Kamala Harris in the election and tech billionaire Elon Musk, now embedded deeply in President-elect Donald Trump's inner circle, who has even called for her ouster.
All of this comes as Kroger has also come under scrutiny for its plans to use artificial intelligence to dynamically set prices, which has raised alarms of privacy violations and unequal treatment of consumers.
