Kroger Files Motion to Enjoin the FTC's Administrative Merger Challenge

Rhea-AI Summary

Kroger has filed a motion for preliminary injunction against the Federal Trade Commission's (FTC) administrative proceeding challenging its merger with Albertson's. The company argues that the FTC's actions violate Constitutional protections in two key areas:

1. The Administrative Law Judge's lack of removability by the President violates Article II.
2. Adjudicating private rights through the Executive Branch rather than the Judicial Branch violates Article III.

Kroger contends that the FTC is inappropriately seeking multiple opportunities to litigate the same issues by splitting its challenge into two separate tribunals. The company remains prepared to defend the merger in the upcoming federal court trial, set to begin on August 26 in the District of Oregon.

Positive

• Kroger is actively defending its merger with Albertsons, demonstrating confidence in the deal's legality
• The company argues that the merger will bring lower prices to customers and secure union jobs
• Kroger is challenging the FTC's process, potentially streamlining future merger proceedings if successful

Negative

• The FTC's challenge to the merger in multiple venues could prolong the approval process
• Legal battles with the FTC may incur significant costs for Kroger
• Uncertainty surrounding the merger's approval could impact Kroger's stock performance

News Market Reaction

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On the day this news was published, KR declined 0.81%, reflecting a mild negative market reaction.

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FTC's in-house tribunal violates Constitutional protections against federal government overreach

Company remains prepared to defend merger with Albertsons in upcoming federal court trial

CINCINNATI, Aug. 19, 2024 /PRNewswire/ -- The Kroger Co. (NYSE: KR) today filed a motion for preliminary injunction in the U.S. District Court, Southern District of Ohio, against the Federal Trade Commission's (FTC) administrative proceeding challenging the company's merger with Albertson's Companies, Inc. The company argues that by proceeding in its administrative tribunal, in addition to the separate action in federal court, the FTC is violating Constitutional protections.

The motion details how the FTC's administrative proceeding against the merger clearly violates the Constitution in two areas:

• First, the FTC violates Article II of the Constitution because the Administrative Law Judge presiding over the administrative proceeding is not removable by the President of the United States. This principle was recognized and applied by the Supreme Court in Free Enterprise Fund v. Public Company Accounting Oversight Board (2010).
• Second, the FTC violates Article III of the Constitution by seeking to adjudicate Kroger's private rights to contract with another private party administratively through the Executive Branch rather than in the independent Judicial Branch. This standard was reinforced this past term by the Supreme Court in SEC v. Jarkesy (2024).

Furthermore, the FTC has sought to split its challenge to the merger into two separate tribunals in an inappropriate attempt to receive multiple opportunities to litigate the same issues. Despite forcing Kroger to participate in this unconstitutional administrative proceeding, the FTC has also filed a motion in the federal court proceedings seeking to block the merger for the duration of its administrative proceeding – which will likely take several years to resolve. Evidentiary hearings for the federal court proceeding are set to being on August 26 in the District of Oregon.

"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," said Rodney McMullen, Kroger Chairman and CEO. "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."

About Kroger

At The Kroger Co. (NYSE:KR), we are dedicated to our Purpose: to Feed the Human Spirit™. We are, across our family of companies nearly 420,000 associates who serve over eleven million customers daily through a seamless digital shopping experience and retail food stores under a variety of banner names, serving America through food inspiration and uplift, and creating #ZeroHungerZeroWaste communities.

 

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SOURCE The Kroger Co.

FAQ

What legal action has Kroger (KR) taken against the FTC regarding its merger with Albertsons?

Kroger (KR) has filed a motion for preliminary injunction in the U.S. District Court, Southern District of Ohio, against the FTC's administrative proceeding challenging the company's merger with Albertson's Companies, Inc.

What are the main constitutional arguments Kroger (KR) is making against the FTC's proceedings?

Kroger (KR) argues that the FTC's actions violate Article II of the Constitution because the Administrative Law Judge is not removable by the President, and Article III by adjudicating private rights through the Executive Branch rather than the Judicial Branch.

When is the federal court trial for Kroger's (KR) merger with Albertsons scheduled to begin?

The evidentiary hearings for the federal court proceeding regarding Kroger's (KR) merger with Albertsons are set to begin on August 26, 2024, in the District of Oregon.

What benefits does Kroger (KR) claim its merger with Albertsons will bring?

Kroger (KR) states that the merger with Albertsons is focused on bringing customers lower prices starting from day one while securing the future of good-paying union jobs.