ICLE Statement on State and Federal Court Orders Blocking the Kroger/Albertsons Merger
PORTLAND, Ore. (Dec. 10, 2024) – The International Center for Law & Economics (ICLE) offers the following statement on today’s opinion from Judge Adrienne Nelson of the U.S. District Court for the District of Oregon in Federal Trade Commission v. Kroger & Albertsons, as well as the order from the State of Washington Superior Court for King County in State of Washington v. Kroger, et al., both enjoining the proposed merger of supermarkets Kroger Co. and Albertsons.
The following quote can be attributed to ICLE President Geoffrey A. Manne:
The FTC and U.S. Justice Department (DOJ) have been forcefully pushing for antitrust market-definition and merger-review standards based primarily on qualitative criteria that the U.S. Supreme Court laid out in its 1968 Brown Shoe v. United States decision, rather than the quantitative economic tests that have since been developed and become the gold standard. Recent courts—including this one and the U.S. District Court for the Southern District of New York in the Tapestry/Capri merger case earlier this year—have accepted these efforts. The result is questionable market definitions, based more on vibes than on economics.
In this case, the court rejected the parties’ assertion that they face strong competition from “supercenters” like Walmart and Costco. While the court is correct that supermarkets face competition from one another, it is clear that the intended purpose of this merger is to better position Kroger to compete with its most aggressive supercenter rivals. Moreover, insisting on a market definition determined by supermarkets’ role as a place where consumers engage in “one-stop shopping” makes little sense in a world of plentiful e-commerce options, such as those offered by Instacart and Amazon. Blocking the merger based on a determination that these sources of competition are not part of the relevant market appears backward-looking.
The following quote on labor-market concerns raised in the case can be attributed to ICLE Chief Economist Brian Albrecht:
While Judge Nelson ultimately chose to base her decision on the consumer-market claims, she was correct to find that the FTC did not present sufficient evidence to establish its labor-monopsony claims in the federal case. Indeed, the retail-labor market is demonstrably competitive and workers have a wide range of alternative employment options—both in and out of the retail sector. Unfortunately, the court did not outright reject the exceedingly narrow market definition of “union grocery labor.“
For more on the topic, see ICLE’s October 2023 white paper “Food-Retail Competition, Antitrust Law, and the Kroger/Albertsons Merger” and the July 2023 issue brief “Five Problems with a Potential FTC Challenge to the Kroger/Albertsons Merger.”
To schedule an interview with Geoff, Brian, or other ICLE scholars about the case, contact ICLE Media and Communications Manager Elizabeth Lincicome at (919) 744-8087 or [email protected].