PORTLAND, Ore. — Kroger and Albertsons will defend their plan to merge in a hearing scheduled to begin Monday in federal court in Oregon.

In October 2022, the chains proposed what would be the largest supermarket merger in U.S. history.

They say joining together would help them compete with big rivals like Walmart and Costco.

But the Federal Trade Commission sued to try to block the merger, saying it would eliminate competition and raise grocery prices. After a three-week hearing, U.S. District Judge Adrienne Nelson will decide whether to grant the FTC's request for a preliminary injunction, which would block the merger while the case goes through in-house proceedings at the FTC.

Kroger and Albertsons will defend their plan to merge – and try to overcome the U.S. government's objections – in a federal court hearing scheduled to begin Monday in Oregon.

The two companies proposed what would be the largest supermarket merger in U.S. history in October 2022. They say joining together would help them rein in costs and better compete with big rivals like Walmart and Costco.

But the Federal Trade Commission sued to try to block the deal, saying it would eliminate competition and raise grocery prices in a time of already high food price inflation. The commission also alleged that quality would suffer and workers' wages and benefits would decline if Kroger and Albertsons no longer competed with each other.

The FTC is seeking a preliminary injunction that would block the merger while its complaint goes before an in-house administrative law judge. In a three-week hearing set to begin Monday, U.S. District Judge Adrienne Nelson is expected to hear from around 40 witnesses, including the CEOs of Kroger and Albertsons, before deciding whether to issue the injunction.

The attorneys general of Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming all joined the case on the FTC's side.

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.

Here’s what to know ahead of the hearing, which is expected to last until Sept. 13.

Why do Kroger and Albertsons want to merge?

Kroger and Albertsons – two of the largest grocery chains in the U.S. – announced in October 2022 that they planned to merge. The companies say the $24.6 billion deal would hold down prices by giving them more leverage with suppliers and allowing them to combine their store brands. They say a merger also would help them compete with big rivals like Walmart, which now controls around 22% of U.S. grocery sales. Combined, Kroger and Albertsons would control around 13%.

Why does the FTC want to block the merger?

Antitrust regulators say the proposed merger would eliminate competition, leading to higher prices, poorer quality and lower wages and benefits for workers. In February, the FTC issued a complaint seeking to block the merger before an administrative judge at the FTC. At the same time, the FTC filed the lawsuit in federal court in Oregon seeking the preliminary injunction. The attorneys general of Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming all joined the federal lawsuit.

Will Kroger and Albertsons close some stores if they merge?

They say no. If the merger is approved, Kroger and Albertsons have agreed to sell 579 stores in places where their stores overlap. The buyer would be C&S Wholesale Grocers, a New Hampshire-based supplier to independent supermarkets that also owns the Grand Union and Piggly Wiggly store brands. Kroger and Albertsons initially planned to divest 413 stores, but the FTC said that plan would not have allowed C&S to be a robust competitor. Kroger and Albertsons agreed to divest additional stores in April. Washington has the most stores that would be divested, with 124, followed by Colorado with 91 and California with 63.

What happens if the Oregon judge issues a preliminary injunction?

If the preliminary injunction is approved, Kroger and Albertsons would likely appeal to a higher court, said Mike Keeley, a partner and antitrust chair at Axinn, Veltrop & Harkrider, a Washington law firm. The case could then move through the FTC’s own judicial system, but since that can take a year or more, companies often abandon a deal before going through the process, Keeley said. Kroger sued the FTC this month, alleging the agency's internal proceedings are unconstitutional and saying it wants the merger's merits decided in federal court. In that case, filed in Ohio, Kroger cited a recent Supreme Court ruling that limited the power of the Securities and Exchange Commission to try some civil fraud complaints within the agency instead of in court.

What happens if the Oregon judge agrees with Kroger and Albertsons?

The FTC would likely appeal the ruling, but Keeley said it's rare for an appeals court to reverse a lower court's ruling on a merger, so the FTC might decide to drop the challenge. The case could still proceed through the FTC's administrative process. It's unclear what impact the presidential election could have on the case. The Biden administration has been particularly aggressive in challenging mergers that it considered anti-competitive, but lawmakers from both parties expressed skepticism about the merger in a 2022 hearing.

If the federal court lets the merger proceed, could state courts still prevent it?

Colorado and Washington have separately sued to block the merger in state courts. That's an unusual situation; normally states are co-plaintiffs in a federal lawsuit. But both states believe they have a lot at stake. Colorado has more than 200 Kroger and Albertsons stores, while Washington has more than 300. Keeley said both states could seek their own injunctions from a different court if the FTC loses, but it would be surprising for another court to block the merger if Kroger and Albertsons are successful in the federal case.

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