Dive Brief:
- Kroger announced Monday it filed a motion in the U.S. District Court for the Southern District of Ohio to enjoin the Federal Trade Commission’s administrative proceeding challenging its proposed merger with Albertsons.
- Kroger claims that it is unconstitutional for the agency to proceed with both its in-house tribunal and its separate federal lawsuit against the mega-deal.
- “[The] FTC has sought to split its challenge to the merger into two separate tribunals in an inappropriate attempt to receive multiple opportunities to litigate the same issues,” Kroger said in the statement.
Dive Insight:
Kroger’s move to block the FTC’s administrative challenge to the merger adds a new dimension to its complex and multipronged effort to push the controversial transaction through in the face of intense opposition from federal regulators, state legal officials, labor organizations and other opponents.
In its motion, filed in a federal court that includes Kroger’s hometown of Cincinnati, the retailer claims that the FTC is acting in violation of the Constitution for two central reasons.
First, Kroger said that the FTC’s use of an administrative law judge to hear the case is improper because the president of the United States cannot remove the judge. Second, Kroger said the FTC is at odds with a Constitutional standard that says the judiciary, not the executive branch, is responsible for adjudicating its private rights to contract with another private party.
Kroger also said that the FTC wants to block the merger for the duration of the administrative hearing, which the company said could last for several years.
An FTC spokesperson declined to comment on Kroger’s motion.
Kroger said both its claims are supported by Supreme Court decisions, adding that it is looking forward to fighting the FTC’s request for a court to block the merger during a legal proceeding due to begin next week in the U.S. District Court for the District of Oregon in Portland.
“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,” Kroger Chairman and CEO Rodney McMullen said in a statement.
In addition to the federal case Kroger faces, the attorneys general for the states of Colorado and Washington have each lodged lawsuits seeking to block the deal. Last month, a Colorado judge issued an order temporarily blocking the deal and granting the state’s request for a preliminary injunction. The grocery giants agreed to not consummate their merger until the state court rules on that case.
Kroger said in a recent emailed statement that combining with Albertsons would offer “lower prices and more choices for more customers in more communities, long-term job security, higher wages and more industry-leading benefits for associates, and a strong unionized workforce.”
Kroger said last week that it plans to invest $1 billion in price cuts if it completes the merger — double the amount of its previous pledge — and McMullen reiterated the company’s claim that the merger would be good for consumers and workers in Kroger’s announcement on Monday.
