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The Kroger Co. (NYSE:KR) filed a motion for a preliminary injunction in the U.S. District Court, Southern District of Ohio, against the FTC’s administrative proceeding challenging its merger with Albertsons Companies, Inc. (NYSE:ACI).
The company argues that the FTC’s use of both its administrative tribunal and a federal court action violates Constitutional protections.
Kroger’s motion states that the FTC’s proceeding violates the Constitution by breaching Article II, as its judge isn’t removable by the President, and Article III, by resolving private contract rights through the Executive Branch instead of the Judicial Branch.
The company claims the FTC is unfairly splitting its challenge into two tribunals for multiple chances to litigate. While pushing Kroger into an unconstitutional administrative process, the FTC also seeks to block the merger in federal court.
Evidentiary hearings in the federal court are set to begin on August 26 in Oregon.
Rodney McMullen, Kroger Chairman and CEO, said, “The merger between Kroger and Albertson’s is squarely focused on ensuring we bring customers lower prices starting day one while securing the future of good-paying union jobs.”
“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.”
The FTC’s lawsuit filed in February argues that Kroger’s merger with Albertsons would lead to higher prices for millions of Americans and put pressure on the labor market for unionized grocery workers, reported Reuters.
The $25 billion supermarket merger, announced in October 2022, aimed to create a grocery giant with over 4,000 stores. However, it has faced antitrust lawsuits, with Washington State’s attorney general leading the challenge over concerns about rising grocery prices.
The proposed merger was paused last month, awaiting a Colorado District Court ruling on a lawsuit aimed at blocking the deal.
Last week, Kroger disclosed that it has begun private exchange offers for eligible holders to swap any outstanding notes issued by Albertsons and its subsidiaries for up to $7.44 billion in new Kroger notes and cash.
Investors can gain exposure to the stock via Invesco Food & Beverage ETF (NYSE:PBJ) and Tidal ETF Trust Newday Ocean Health ETF (NYSE:AHOY).
Price Action: KR shares are down 0.25% at $52.63 premarket at the last check Tuesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo via Shutterstock
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