PORTLAND, Ore. (AP) — The federal government urged a U.S. District Court judge on Tuesday to temporarily prevent a proposed merger between Kroger and Albertsons, saying in closing arguments the combination would “almost certainly” benefit shareholders and not everyday shoppers.
Lawyers for the Federal Trade Commission and for the supermarket chains gave their closing arguments at the end of a three-week hearing on the commission's request for a preliminary injunction to block the $24.6 billion deal.
Kroger and Albertsons argued their merger would preserve consumer choice by allowing them to better compete against growing rivals like Walmart, Costco and Amazon.
“If we don’t do something, the corner grocery store is in real danger," Kroger attorney Matt Wolf said.
U.S. District Judge Adrienne Nelson must now decide whether to grant the injunction while the FTC's anti-trust complaint goes goes before an in-house administrative law judge. Nelson said she would work “expeditiously” on her decision, but she didn't say when she would rule.
Kroger and Albertsons proposed what would be the largest supermarket merger in U.S. history in 2022. The FTC alleged the merger would eliminate competition and lead to higher food prices for already struggling customers.
Susan Musser, the FTC's chief trial counsel, argued Tuesday that Kroger and Albertsons primarily compete with each other and not places like Amazon or Costco, where consumers do other kinds of shopping.
“It’s this local competition, in these local communities, that this merger will eliminate,” Musser said.
But Wolf pushed back, saying Kroger and Albertsons were competing for the same customers as retailers that have lower labor costs because their workers aren't unionized.
“Supermarkets are losing this food fight, and we pay the price for that fact," Wolf said.
Kroger has said it plans to invest $1 billion in lower prices, if the merger goes through. Wolf said the company would focus on lowering prices “from day one.”
But Musser said the judge should be skeptical about the companies' promises, which aren't legally binding. Kroger and Albertsons' executives might be well-intentioned, she said, but they will face pressure to report profits and keep prices high.
“Executives have a fiduciary duty not to shoppers, but to shareholders,” Musser said. “Experience tells us that promises can be broken.”
Albertsons CEO Vivek Sankaran, who testified earlier in the hearing, attended the closing arguments Tuesday but didn't speak.
FTC attorneys have noted that the two supermarket chains currently compete in 22 states, closely matching each other on price, quality, private label products and services like store pickup. Shoppers benefit from that competition and would lose those benefits if the merger is allowed to proceed, they said.
Under the deal, Kroger and Albertsons would sell 579 stores in places where their locations overlap to C&S Wholesale Grocers, a New Hampshire-based supplier to independent supermarkets that also owns the Grand Union and Piggly Wiggly store brands.
The FTC maintains C&S is ill-prepared to take on the stores now owned by Albertsons and Kroger. Earlier in the hearing, Laura Hall, the FTC’s senior trial counsel, cited internal documents that indicated C&S executives were skeptical about the quality of the stores they would get and may want the option to sell or close them.
But Wolf said Tuesday that C&S has the experience and national scale to handle the divestiture. “We picked the party that could get the job done," he said.
Kroger, based in Cincinnati, Ohio, operates 2,800 stores in 35 states, including brands like Ralphs, Smith’s and Harris Teeter. Albertsons, based in Boise, Idaho, operates 2,273 stores in 34 states, including brands like Safeway, Jewel Osco and Shaw’s. Together, the companies employ around 710,000 people.
In seeking to stop the merger, the FTC and labor union leaders have argued that workers’ wages and benefits would decline if Kroger and Albertsons no longer competed with each other. They also expressed concern that potential store closures could create so-called food and pharmacy “deserts” for consumers.
Six local chapters of the United Food and Commercial Workers International Union, which together represent 100,000 Kroger and Albertsons workers in 12 states, said in a joint statement Tuesday that the companies can’t be trusted.
“The corporations admitted under oath, despite repeated comments to the public and media to the contrary, that some stores may close after a merger, prices may not actually go down after a merger and claims they have made to protect union jobs are not legally enforceable,” the group said in a statement.
The attorneys general of Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming all joined the FTC’s lawsuit on the commission’s side. Washington and Colorado filed separate cases in state courts seeking to block the merger. Washington’s case opened in Seattle on Monday.
If Nelson agrees to issue the injunction, the FTC plans to hold the in-house hearings starting Oct. 1. Kroger sued the FTC last month, however, alleging the agency’s internal proceedings are unconstitutional and saying it wants the merger’s merits decided in federal court. That lawsuit is being considered by a federal court in Ohio.
Shares in both Kroger and Albertsons fell 2% in trading Tuesday.
Durbin reported from Detroit.
The federal courthouse is reflected in the rear window as Albertsons CEO Vivek Sankaran enters a vehicle and leaves after testifying in a federal court hearing on Wednesday, Sept. 4, 2024, in Portland, Ore. The Federal Trade Commission is seeking a preliminary injunction to block a merger of supermarket companies Albertsons and Kroger. (AP Photo/Jenny Kane)
NEW YORK (AP) — Alex Verdugo hit a tiebreaking single in the seventh inning and saved at least one run with a sliding catch along the left-field line, boosting the New York Yankees over the Kansas City Royals 6-5 on Saturday night in their AL Division Series opener.
New York’s Gleyber Torres and Kansas City’s MJ Melendez hit two-run homers in a back-and-forth game in which the Royals wasted leads of 1-0, 3-2 and 5-4 and the Yankees failed to hold 2-1 and 4-3 margins. It was the first postseason game with five lead changes, according to the Elias Sports Bureau.
“What a game!” Yankees manager Aaron Boone said.
Kansas City pitchers tied their season high with eight walks, forcing in a pair of runs in the fifth inning. The Yankees were just 1 for 11 with runners in scoring position before Verdugo lined a single off loser Michael Lorenzen.
Verdugo’s hit scored Jazz Chisholm Jr., who singled leading off and stole second on a play allowed to stand following a video review.
“I think we did have a really good argument that that should have been overturned,” Royals manager Matt Quatraro said.
Boone started a slumping Verdugo in left over rookie Jasson Domínguez in a decision influenced by defense.
“I feel like I’m pretty real with myself,” Verdugo said. “As in fans booing me, fans getting on me. I understand it. I was booing myself, too.”
Verdugo entered in a 2-for-34 skid at the plate.
“I just kind of let it spiral out of control a little bit,” Verdugo said. “For me, it was just really leaning on my guys in the clubhouse. They all got my back. They all know what kind of player I am and how I played throughout my whole career and just kept telling me, `Man, don’t let this season or this little glimpse make your whole year. You can make up for a lot of things in the playoffs.'”
With the Yankees trailing 3-2, Verdugo made a sliding catch on Michael Massey’s fourth-inning fly just inside the line to strand two runners. The ball hit the heel of Verdugo’s glove and bounced off his chest before he grabbed it with his bare hand.
“Thank goodness it popped over to the left hand, so it all worked out,” he said.
Chisholm, playing third base this year for the first time after the Yankees acquired him from Miami at the July trade deadline, made three fine defensive plays, two with the help of first baseman Oswaldo Cabrera, starting because of Anthony Rizzo’s fractured fingers.
Four Yankees relievers combined to allow only an unearned run over four innings after ace Gerrit Cole came out, unhappy with his performance. Clay Holmes, dropped from his closer’s job last month, worked 1 2/3 scoreless innings for the win. Luke Weaver got four straight outs for the save in his postseason debut.
Yankees star Aaron Judge went 0 for 4 with three strikeouts, and Royals standout Bobby Witt Jr. was 0 for 5, barking at plate umpire Adam Hamari after a called third strike in the ninth.
Juan Soto went 3 for 5 and threw out Salvador Perez in the second inning trying to score from second on Melendez’s single to right. Kansas City first baseman Yuli Gurriel threw out runners at the plate on grounders in the first and fifth.
After a day off between Games 1 and 2, the series between the AL-best Yankees and wild-card Royals resumes Monday night. These teams met in four playoffs from 1976-80, with the Yankees winning the first three and getting swept in the last.
Cole allowed four runs — three earned — and seven hits in five-plus innings. Royals starter Michael Wacha gave up three runs, four hits and three walks in four-plus innings.
Tommy Pham hit a second-inning sacrifice fly, and Torres put the Yankees ahead 2-1 in the third with a 339-foot home run just over the right-field short porch.
Melendez’s two-run homer in the fourth gave Kansas City a 3-2 lead, but Royals pitchers issued four seven-pitch walks in the fifth, forcing in runs with walks by Angel Zerpa to Austin Wells and by John Schreiber to Anthony Volpe. The Yankees had not gotten a pair of bases-loaded walks in a postseason game since Bullet Joe Bush and Joe Dugan against the New York Giants’ Rosy Ryan in Game 6 of the 1923 World Series.
“They looked at a lot of pitches. We were close, but not good enough pitches to make them count,” Zerpa said through a translator.
Volpe's throwing error at shortstop set up pinch-hitter Garrett Hampson's two-run, sixth-inning single through a drawn-in infield that put the Royals ahead 5-4. Wells, in a 2-for-43 slide, tied the score in the bottom half with a two-out RBI single off Lorenzen.
UP NEXT
New York's Carlos Rodón (16-9, 3.96 ERA) starts Game 2 in the best-of-five series against the Royals' Cole Ragans (11-9, 3.14) in a matchup of left-handers.
AP MLB: https://apnews.com/hub/mlb
New York Yankees outfielder Aaron Judge (99) reacts after striking out against the Kansas City Royals during the sixth inning of Game 1 of the American League baseball division series, Saturday, Oct. 5, 2024, in New York. (AP Photo/Adam Hunger)
New York Yankees third base Jazz Chisholm Jr. reacts after a base hit against the Kansas City Royals during the seventh inning of Game 1 of the American League baseball division series, Saturday, Oct. 5, 2024, in New York. (AP Photo/Adam Hunger)
Kansas City Royals third base Maikel Garcia reacts after striking out to end the top of the eighth inning against the New York Yankees during Game 1 of the American League baseball division series, Saturday, Oct. 5, 2024, in New York. (AP Photo/Adam Hunger)
Kansas City Royals' MJ Melendez (1) reacts as he rounds the bases after hitting a solo home run against the New York Yankees during the fourth inning of Game 1 of the American League baseball division series, Saturday, Oct. 5, 2024, in New York. (AP Photo/Adam Hunger)
New York Yankees' Gleyber Torres reacts after hitting a two-run home run against the Kansas City Royals during the third inning Game 1 of the American League baseball division series, Saturday, Oct. 5, 2024, in New York. (AP Photo/Adam Hunger)
Kansas City Royals pitcher Michael Wacha (52) is relieved by Kansas City Royals manager Matt Quatraro (33) during the fifth inning of Game 1 of the American League baseball division series against the New York Yankees, Saturday, Oct. 5, 2024, in New York.
New York Yankees pitcher Gerrit Cole walks off the mound during the sixth inning of Game 1 of the American League baseball division series against the Kansas City Royals, Saturday, Oct. 5, 2024, in New York. (AP Photo/Adam Hunger)
Kansas City Royals second base Michael Massey (19) can't make the tag on New York Yankees' Jazz Chisholm Jr. who stole second base during the seventh inning of Game 1 of the American League baseball division series, Saturday, Oct. 5, 2024, in New York. (AP Photo/Adam Hunger)
New York Yankees' Jazz Chisholm Jr. reacts as he scores against the Kansas City Royals during the seventh inning of Game 1 of the American League baseball division series, Saturday, Oct. 5, 2024, in New York. (AP Photo/Adam Hunger)
New York Yankees outfielder Alex Verdugo (24) comes up with the catch on a fly ball hit by Kansas City Royals' Michael Massey to end the fourth inning during Game 1 of the American League baseball division series, Saturday, Oct. 5, 2024, in New York. (AP Photo/Adam Hunger)
New York Yankees outfielder Alex Verdugo (24) comes up with the catch on a fly ball hit by Kansas City Royals' Michael Massey to end the fourth inning during Game 1 of the American League baseball division series, Saturday, Oct. 5, 2024, in New York. (AP Photo/Adam Hunger)
New York Yankees' Alex Verdugo (24) connects for a double to drive in a run against the Kansas City Royals during the seventh inning of Game 1 of the American League baseball division series, Saturday, Oct. 5, 2024, in New York. (AP Photo/Frank Franklin II)
New York Yankees' Alex Verdugo reacts after driving in a run on a double against the Kansas City Royals during the seventh inning of Game 1 of the American League baseball division series, Saturday, Oct. 5, 2024, in New York. (AP Photo/Adam Hunger)
New York Yankees catcher Austin Wells (28) and outfielder Alex Verdugo celebrate after defeating the Kansas City Royals in Game 1 of the American League baseball division series, Saturday, Oct. 5, 2024, in New York. (AP Photo/Adam Hunger)
New York Yankees left fielder Alex Verdugo, left, center fielder Aaron Judge, center, and Juan Soto celebrate after beating the Kansas City Royals in Game 1 of the American League baseball division series, Saturday, Oct. 5, 2024, in New York. (AP Photo/Adam Hunger)
