Kroger, Albertsons Dodge Bid to Halt $24.6 Billion Merger

Kroger Co. and Albertsons Cos. dodged a bid from consumers for a preliminary injunction to halt the grocers’ $24.6 billion merger after a federal judge ruled that the plaintiffs lacked standing and failed to explain how the deal would affect them personally.

“Although the proposed merger may be concerning from an antitrust perspective, the plaintiffs have not come close to providing the information necessary to determine whether concern is truly warranted.” Judge Vince Chhabria of the US District Court for the Northern District of California said in a Wednesday ruling. “For now, the failure to allege standing is reason enough to deny the motion.”

Chhabria also granted Kroger and Albertsons’ motion to dismiss the complaint with leave to amend. The lawsuit was filed in February by a group of consumers who claimed the deal would create a monopoly between two of the largest US supermarkets.

The lawsuit also targeted Cerberus Capital Management LP, an Albertsons investor receiving more than a third of a related $4 billion “special dividend,” the deal’s most contentious provision.

Chhabria said the plaintiffs lacked standing to challenge the dividend payment. “They allege that the dividend payment will financially weaken Albertsons, resulting in higher prices, worse services, and the possibility that Albertsons will make a ‘failing firm’ defense to support the merger,” he stated. “But the plaintiffs offer no credible allegations to ground these predictions.”

In an interview with Bloomberg Law ahead of the ruling, Joe Alioto, attorney for the plaintiffs, said the merger would result in higher food prices and thousands of layoffs between the two grocers’ networks.

The case is Whalen et al v. Albertsons Companies Inc., N.D. Cal., No. 3:23-cv-00459.