FTC will take more time to review grocery megadeal between Kroger and Albertsons

Federal regulators have more time to decide on Kroger’s pending $26.4 billion takeover of Albertsons.

The companies and the Federal Trade Commission agreed to move a key decision date from December to Jan. 17, according to a filing in a lawsuit pending in California that seeks to block one of the largest retail takeovers in U.S. history.

The FTC and Kroger both declined to comment on the timing of regulators’ plan to disclose their assessment of the deal. The agency could allow Kroger to move ahead or force it to divest more than the 413 stores it has proposed to sell to clear antitrust concerns. It also could sue to stop the merger.

The California lawsuit was filed in February by San Francisco attorney Joseph Alioto on behalf of consumers there and in other states. It claims the merger of the two largest supermarket chains “may substantially lessen competition and tend to create a monopoly” in several areas of the U.S.

Last month, Kroger gave the FTC its plan to sell 413 stores to C&S Wholesale Grocers.

[Kroger and Albertsons propose selling some Alaska Carrs Safeway stores under $24.6B merger]

The FTC review will take the planned divestiture into account. The Teamsters and progressive members of Congress have been critical of the sale to C&S as part of their overall opposition to Kroger’s acquisition of its largest competitor. Critics cite the 2015 acquisition of Safeway by Albertsons as a warning that divesture cures haven’t achieved the desired outcomes.

Scott Moses, an investment banker advising Albertsons in the pending transaction, said in a statement issued late Thursday that it’s not correct to compare the prospects of C&S as a buyer to Haggen, a grocer that failed after buying stores as part of the Albertsons purchase of Safeway.

Haggen was an 18-store chain operating in Oregon and Washington when it swallowed 146 stores in Southern California, Arizona and Nevada and converted them to its brand. Those stores were “over 1,000 miles away from where most anyone had ever heard of Haggen,” Moses said.

“C&S is a radically stronger buyer than Haggen in several critical ways,” he said.

It’s a family-owned grocery wholesale business with $30 billion in annual revenue and operates stores in multiple regions, he said. It’s also pro-union and will assume collective bargaining agreements, he added.

Most divested stores won’t be abruptly changing brand names above the door. The sale to C&S includes three banners — QFC in Washington and Oregon, Mariano’s in Illinois and Carrs in Alaska. C&S also will be able to use the Albertsons banner in four states: Arizona, California, Colorado and Wyoming.

The Kroger-Albertsons merger will create “another strong grocery competitor” to compete with national chains Walmart, Target, Amazon, Whole Foods Market, Costco, Aldi and Dollar General, Moses said. Those retailers for the most part have grown organically. Kroger and Albertsons have mostly grown through acquisitions.

Multiple regional chains compete successfully against the nationals, such as H-E-B and Brookshire’s in Texas, Publix in the Southeast, Wegmans in the Northeast and Schnucks in Missouri.

Alioto said he is seeking a trial before the FTC makes a ruling.

“Kroger and Albertsons have both been on buying sprees for more than 15 years, constantly seeking to eliminate competition among themselves,” he said. “The idea that the government would allow this last big one is absurd.”

In addition to its Kroger brand, the Ohio-based grocer operates Fred Meyer, Ralphs, Dillons, Smith’s, King Soopers, Fry’s, QFC, City Market, Owen’s, Jay C, Pay Less, Baker’s, Gerbes, Harris Teeter, Pick ‘n Save, Metro Market, Mariano’s, Food 4 Less and Foods Co.

Albertsons’ additional banners are Safeway, Vons, Jewel-Osco, Shaw’s, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market, Haggen, Carrs, Kings Food Markets and Balducci’s Food Lovers Market.