Sponsored By

‘Novel complaints’ in Kroger merger lawsuit could be a tough sell, according to former FTC chair

Ohlhausen believes the FTC will have to provide specific evidence to the court for it to accept the commission’s definition of what constitutes competition

Timothy Inklebarger, Editor

April 19, 2024

3 Min Read
FTC building-Washington DC_public domain copy_3.jpg
Federal Trade Commission

The Federal Trade Commission’s lawsuit aimed at blocking the $24.6 billion Kroger, Albertsons merger case is set for a hearing in August, and the commission’s former chairperson said some of the lawsuit’s more novel complaints could face great scrutiny. 

Maureen Ohlhausen, who headed the FTC from 2012 to 2018 and now is a partner at Wilson Sonsini Goodrich & Rosati, said in a webinar on Thursday that merger reviews by the FTC are getting longer because they are generally considering a wider array of issues than in the past. 

That scrutiny, while relatively new, did begin during the Trump Administration, Ohlhausen said. “[Reviews] tend to be intensely local, so that often means state AGs are involved…they conduct their own review, and so that can contribute to the total length of the investigation.”

The FTC’s case to stop the grocery merger was joined by attorneys general in Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon, and Wyoming. Additionally, the AGs in Colorado and Washington state have filed separate lawsuits aimed at blocking the deal. 

Proponents of the merger have argued, among other things, that the FTC’s definition of the market is narrowly defined and doesn’t take into account other retailers they compete against in the marketplace, such as retail giants Walmart and Amazon. 

“This relevant market really hasn’t been tested in some time,” she said, adding that the market has seen massive growth in “online shopping, online acquisitions, and some of the new formats coming in and really taking on what we might have previously considered just being served by the traditional grocery market.”

In antitrust cases, there has always been a question how narrowly a market can be defined, she said. Ohlhausen believes the FTC will have to provide specific evidence to the court for it to accept the commission’s definition of what constitutes competition in the grocery store market. “As I said, the market really has changed,” Ohlhausen added. 

In addition to the argument that a merger of the two largest pure-play grocers will saturate the market and drive out competition, the FTC argued in its complaint that the merger would take place to the detriment of organized labor. 

“In some regions, such as in Denver, the combined Kroger/Albertsons would be the only employer of union grocery labor. Union grocery workers’ ability to leverage the threat of a boycott or strike to negotiate better CBA terms would also be weakened,” the FTC said in a press release in February.

Ohlhausen noted that this is a novel approach for the commission in antitrust cases, but it could become a more central focus of its argument.

“The FTC may want to just say, ‘Oh, we don't really need to define the market because we’re showing the anti-competitive effect.’” she said.

That might be a hard sell with the judge, though, she said. The argument is novel and generally untested in these kinds of cases, and a “new landscape” for the judge to consider, according to Ohlhausen.

Efforts by the grocers to divest more than 400 stores to C&S Wholesale Grocers could face a tough time in court, because the FTC has generally been reticent to accept divestiture packages as an antitrust remedy, Ohlhausen said.

**

 

The Federal Trade Commission’s lawsuit aimed at blocking the $24.6 billion Kroger, Albertsons merger case is set for a hearing in August, and the commission’s former chairperson, Maureen Ohlhausen, said some of the lawsuit’s more novel complaints could face great scrutiny. Do you think the FTC will have a difficult time proving its case? Let us know in the comments below, or email the SN staff at [email protected]

Read more about:

The Kroger Co.Albertsons

About the Author

Timothy Inklebarger

Editor

Timothy Inklebarger is an editor with Supermarket News. 

Stay up-to-date on the latest food retail news and trends
Subscribe to free eNewsletters from Supermarket News

You May Also Like