Supermarket chain Kroger has initiated legal action against the US Federal Trade Commission (FTC), claiming that the agency's internal judicial process is unconstitutional.
The grocery chain is seeking a preliminary injunction in the US District Court, Southern District of Ohio, to halt the FTC's administrative proceedings that challenge Kroger's proposed merger with Albertson's.
The two retailers entered into an agreement in October 2022 under which Kroger will acquire all of Albertsons for an enterprise value of $24.6bn.
In February 2024, the FTC's lawsuit against the deal argued that the merger would lead to higher prices for consumers and impact the labour market for unionised grocery workers.
In the latest move, Kroger outlines two constitutional violations by the FTC.
The retailer asserts that the administrative law judge overseeing the case cannot be removed by the President of the US, contravening Article II of the Constitution.
This principle was upheld by the Supreme Court in the Free Enterprise Fund v Public Company Accounting Oversight Board case in 2010.
Kroger argues that the FTC's attempt to adjudicate the company's private contract rights through the executive branch instead of the independent judicial branch violates Article III.
It also contends that the FTC's strategy of splitting its challenge to the merger across two separate tribunals is an improper attempt to litigate the same issues multiple times.
Despite this, the FTC has also filed a motion in federal court to block the merger for the duration of its administrative proceeding, which could take years to resolve.
The federal court's evidentiary hearings are scheduled to begin on 26 August 2024 in the District of Oregon.
Kroger chairman and CEO Rodney McMullen said: "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.
"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."
Kroger’s lawsuit in Cincinnati precedes a trial set for the following week, in which the FTC seeks a temporary block of the merger in a Portland, Oregon federal court.
