Lead trial for Kroger-Albertsons merger begins on Monday

A groundbreaking trial begins on Monday over the question of whether the parent companies of two supermarket chains in Alaska can merge.

The Federal Trade Commission is trying to prevent Kroger from buying Albertsons. Together they own 35 stores in Alaska under the Fred Meyer, Carrs and Safeway brands, as well as Crow Creek Mercantile in Girdwood. Most Alaskans live in a community where the stores compete directly with each other.

The two food giants own about 5,000 stores across the country.

The case is before a federal judge in Oregon. It is the first of four overlapping legal battles to go to trial. The judge in that case is expected to decide whether or not to stop the merger, while more substantive arguments are heard before an administrative law judge in Washington, DC. The trial is expected to last three weeks.

The Oregon judge's decision will not necessarily determine the success or failure of the merger. But if the FTC wins, the companies could abandon the merger due to the costs of further litigation, uncertainty and delays.

“We are prepared to defend this merger in the upcoming trial in federal court,” Kroger CEO Rodney McMullen said in a statement this week. “The Kroger-Albertsons merger is entirely focused on providing our customers with lower prices from day one while securing the future of good-paying union jobs.”

Kroger and Albertsons are looking to merge to be more competitive with even larger retailers and other retailers that have expanded their business into grocery. To avoid creating local monopolies, they plan to sell hundreds of their competing stores to a separate grocery wholesaler that will continue to operate the stores. This includes 17 Carrs and Safeways stores in Alaska, as well as the store in Girdwood.

The companies claim the deal will improve competition without losing workers' jobs or closing stores. This month, Kroger doubled its previous pledge to invest in lower prices if the merger goes through, from $500 million to $1 billion. The companies have also promised to invest $1 billion in improving worker benefits and $1.3 billion in improving stores. But there is no commitment to keep those promises.

The Federal Trade Commission, consumer protection groups, grocery trade unions, and many politicians and private citizens don't believe the companies. They believe the merged company would be too powerful and would end up hurting ordinary shoppers and workers.

Until recently, only one local branch of a food retail union supported the merger. The United Food and Commercial Workers Local 555, which represents 35,000 workers in Oregon, Idaho and Washington, publicly supported the merger in February.

But as wage negotiations stalled this month, Local 555 withdrew its support.

“Kroger's continued failure to meet its obligations in the current contracts, despite being given every opportunity, is disappointing,” Local 555 President Dan Clay said in a statement. “Their abhorrent decisions at the bargaining table have disappointed both their workers and their customers.”

Further legal action is pending. A trial is scheduled to begin in a Washington state court on September 16. A judge in Colorado issued an order last month to stay the merger pending a lawsuit there. The trial is scheduled to begin on September 30.

Kroger filed its own lawsuit against the Federal Trade Commission in federal court in Ohio on Monday. Kroger argues that the FTC's two lawsuits – the federal case in Oregon and the executive branch case in administrative court in Washington, DC – violate the company's constitutional rights.

Jeremy Hsieh covers Anchorage with a focus on housing, homelessness, infrastructure and development. You can reach him at[email protected]or 907-550-8428. Read more about JeremyHere.