The Cincinnati Enquirer, Kroger's hometown newspaper, reports that "Kroger’s plan to take over rival Albertsons faces growing legal peril from all sides after several states and consumers have sued to stop the controversial $25 billion deal."
While conventional wisdom is that potential - some would suggest, probable - opposition from the Federal Trade Commission (FTC) is the biggest challenge to the deal, the Enquirer reports that state and consumer lawsuits could actually be a larger threat.
According to the story, "Consumer and union groups have opposed the deal, claiming it will hurt competition and ultimately raise prices and harm workers. The FTC has declined to comment as they decide whether to block it. Last year, Kroger executives vowed to fight for the deal in court if necessary.
"So far, multiple states and one consumer group have taken legal action against the merger. Several states are pursuing antitrust investigations that could lead to more fights in court." And, to be clear, "U.S. antitrust law permits not just federal challenges but state and even consumer lawsuits."
The lawsuit filed by Washington State Attorney General Bob Ferguson is seen as a "wild card," though it is seen as an advantage that Ferguson "filed the lawsuit in state court where judges have less experience in antitrust disputes – and are elected to the bench. And Ferguson, a Democrat, is a leading candidate for Washington’s governor this year, in part running on his record of consumer advocacy and with the support of several labor unions." The betting is that Ferguson filed the case in a court where he believed he had the best chance of winning.
In addition, "as federal antitrust officials grind ahead, several states say they are also looking at the deal and further legal challenges are possible. Arizona, California and Colorado told The Enquirer they are investigating the proposed merger for antitrust implications, but otherwise offered little comment."
There have been a number of suits filed by states and consumers that have failed, the Enquirer points out, either because judges ruled they didn't have sufficient evidence to move forward or because those filing were seen as not having standing.
The Enquirer also notes that Kroger has vowed to go to court to do battle with any entity that opposes the deal.
- KC's View:
guessopinion hasn't changed. The FTC will reject the deal on antitrust grounds, and the whole thing will end up in the courts. At which point, it is anybody's guess how it turns out, and if there is a change in administrations next year, that almost certainly going to have an impact.
Though one thing seems clear - the lawyers are going to get rich.