The Federal Trade Commission, along with eight state attorneys general and the District of Columbia, filed a lawsuit in U.S. District Court in Oregon on Monday to block the proposed $24.6 billion merger between grocery giants Kroger and Albertsons. The FTC alleges that the deal is anticompetitive and could harm consumers by leading to higher prices for groceries and other essential household items. The merger, which was announced at a time of high food-price inflation, has drawn tough regulatory scrutiny. The FTC's Bureau of Competition Director, Henry Liu, stated that Kroger's acquisition of Albertsons would lead to additional grocery price hikes, further exacerbating the financial strain consumers across the country face today.

The proposed merger would create a grocery empire with more than 4,000 stores, controlling around 13% of the U.S. grocery market. Kroger and Albertsons argued that the deal would help them better compete with larger rivals like Walmart, Amazon, and Costco. Kroger has promised to invest $500 million to lower prices as soon as the deal closes and has pledged to invest $1.3 billion in store improvements at Albertsons. However, the FTC and the states joining the lawsuit expressed concerns about erasing competition for workers, threatening their ability to win higher wages, better benefits, and improved working conditions.

The lawsuit comes amidst rising food inflation, with prices for food eaten at home rising significantly higher than the typical 2.5% per year. The Biden administration has shown a willingness to challenge big mergers in court, as seen in the recent lawsuit to block the proposed merger between JetBlue Airways and Spirit Airlines. Kroger and Albertsons had hoped to close the deal early this year, but they announced in January that it was more likely to close in the first half of Kroger's fiscal year. The opposition to the merger also included concerns raised by lawmakers, consumer groups, and the United Food and Commercial Workers International Union, which represents over 1 million workers in the grocery and essential industries.