The American grocery industry faces a roadblock in the proposed $24.6bn merger between Kroger and Albertsons.

The US Department of Justice (DOJ) has sided with the state of Colorado in its lawsuit against the deal, indicating a potential hurdle for the companies, Bloomberg reported.

Colorado filed a separate lawsuit in its state court, arguing the merger would harm competition and negatively impact residents.

It requested an injunction to block the deal. Kroger and Albertsons challenged Colorado’s authority, claiming the state can not seek a nationwide injunction.

The DOJ stepped in, backing Colorado’s right to pursue its own antitrust case under state law. 

The department cited past examples of states taking on tech giants such as Google and Meta to emphasise this right.

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It clarified that states can seek different remedies than those pursued via federal lawsuits.

Kroger disagrees with the DOJ’s position, arguing it contradicts a previous stance in the T-Mobile-Sprint merger.

Colorado counters that the T-Mobile case involved suing under federal law while its own relies on state antitrust regulations.

A judge is yet to decide on dismissing Colorado’s case.

A separate hearing in August this year will address the state’s request for a temporary block on the merger while the legal battle continues.

The DOJ’s support strengthens Colorado’s challenge and casts doubt on the Kroger-Albertsons merger’s immediate future.

Both sides will likely continue legal arguments until a final decision is reached.

This case could have broader implications for future antitrust lawsuits involving multistate mergers.

US competition officials at the Federal Trade Commission moved to block the merger between Kroger and Albertsons, two of the country’s largest retailers, in February 2024.

The FTC’s request for a preliminary injunction to halt supermarket chain Kroger‘s proposed acquisition of competitor Albertsons is set for trial on 26 August 2024.

Last month, Kroger and Albertsons amended their store divestiture plan and agreed to sell 166 additional stores to C&S Wholesale Grocers.

This move aimed to address antitrust concerns and secure regulatory approval for their proposed merger.

The Kroger-Albertsons merger could significantly alter the US grocery industry landscape. 

If approved, it would create a giant supermarket chain, potentially reducing competition and consumer choice.