Judges Block Kroger-Albertsons Merger

A woman named Kerry (she asked that her last name not be used) was perusing the canned goods section at the Magnolia QFC when she was asked if she had heard that a federal judge in Oregon had blocked parent company Kroger’s proposed merger with Albertsons. (About an hour later, a King County Superior Court judge also issued an injunction blocking the merger).

She had not, but she expressed relief.

“I never thought it was a good idea,” she said. “I thought prices might rise.”

Analysts had long predicted that the merger would fail. Even Kroger executives themselves recently admitted that the company was prepared to move forward if judges ruled against the plan.

“Regardless of the outcome of the trials, Kroger is operating from a position of strength,” Kroger Chair and CEO W. Rodney McMullen told analysts in an earnings call. “And we are optimistic about our future.” 

Kroger had planned to divest itself of QFC, but was going to continue to operate Fred Meyer.

According to Washington Attorney General Bob Ferguson’s office, the two grocers operate more than 300 stores across Washington state and 194 in the greater Seattle area. The office had argued against the merger on the grounds that it violated antitrust laws. Kroger and Albertsons executives had argued that they needed to combine forces to compete with the likes of Amazon, Costco and Wal-Mart.

Ferguson’s office noted that the rulings were the first decisions “on the merits of the case amongst multiple state and federal challenges.”

“Today’s decision means the merger cannot go forward,” Ferguson’s office said in a statement. “More than half of all supermarkets in Washington state are currently owned by either Kroger or Albertsons, and they account for more than 50% of all supermarket sales.”

Cincinnati-based Kroger purchased Portland-based Fred Meyer in 1999, about two years after acquiring QFC, which was founded in Seattle in 1955. Though neither chain has been locally owned for years, residents in both Washington and Oregon still have a sense of ownership over both chains. 

For many, me included, it brings back childhood memories.

“I’ve been shopping here for years,” Kerry said. “I will keep shopping here.”