FTC’s Updated Merger Guidelines in Practice

Business, Securities

by | Jun 24, 2024

Challenging the Kroger/Albertsons Merger

The Department of Justice (DOJ) and the Federal Trade Commission (FTC) jointly introduced updated ‘Merger Guidelines’ in December of 2023, outlining their method for evaluating merger and acquisition deals for potential antitrust concerns. The Guidelines were introduced as a framework for entities entering into M&A transactions.

Updated Merger Guidelines

While not legally binding, the eleven Guidelines often influence court decisions. The new Guidelines replace those previously outlined in both 2010 and 2020, and outline multiple factors the DOJ and FTC are concerned with when determining whether to block a potential merger, notably:

  • Guideline 1: Mergers raise a presumption of illegality when they significantly increase concentration in a highly concentrated market;
  • Guideline 2: Mergers can violate the law when they eliminate substantial competition between firms;
  • Guideline 7: When an industry undergoes a trend toward consolidation, the agencies consider whether it increases the risk a merger may substantially lessen competition or tend to create a monopoly; and
  • Guideline 10: When a merger involves competing buyers, the agencies examine whether it may substantially lessen competition for workers, creators, suppliers, or other providers.

The complete set of Guidelines also details the economic tools and evidentiary standards used by the agencies in their analysis. Additionally, the Guidelines discuss rebuttal evidence that may potentially support transactions flagged for review. These updated Guidelines reflect an effort by the DOJ and FTC to address comprehensive and evolving dynamics in today’s competitive market.

FTC’s Challenge to the Kroger/Albertsons Merger

We are now allowed to witness the Guidelines in action. In the fall of 2022, American grocery companies, Kroger Company and Albertsons Companies Inc., agreed for Kroger to purchase all of Albertsons’ equity for approximately $24.6 billion. Following the companies’ announcement of the proposed transaction, in February of 2024, the FTC sued to block the merger between the two supermarket giants. The action followed lawsuits independently filed by Colorado and Washington’s attorney generals, seeking to block the deal. Attorney generals of nine additional states also joined the FTC in its lawsuit, including California and Nevada.

In its complaint, the FTC claims that the proposed acquisition is by far the largest supermarket merger in U.S. history and if allowed, would substantially lessen competition, likely resulting in Americans paying more for food and other essential household goods, leading to lower quality products and services, and limit choices for consumers. The FTC further explains that the merger would reduce the ability of approximately 700,000 employees to secure better wages and benefits, and would eliminate competition for unionized grocery store workers.

When the merger was announced, Kroger and Albertsons pledged to divest 413 stores and other assets across multiple states to C&S Wholesale Grocers. They believed that these divestitures would address any antitrust concerns by the FTC. Despite this effort, the FTC was unconvinced that the divestitures would prevent a substantial lessening of competition in supermarkets.

In April 2024, Kroger and Albertsons were still hoping and pushing for the merger, claiming that it was a crucial move for them to be able to compete with Walmart and Amazon. As part of their continued efforts to quell the FTC’s concerns, the supermarket chains agreed to sell more stores to C&S Wholesale Grocers than initially planned. Despite this, the FTC continued to be a roadblock to the transaction, citing concerns including C&S’ inability to operate as a standalone business and viable competitor. A hearing on the FTC’s request for a preliminary injunction to block the planned merger has been set to begin on August 26, 2024.

Important Considerations Ahead

This is a precedential illustration of the FTC’s Guidelines in practice. As the FTC’s first challenge under the revised Guidelines, the Kroger/Albertsons challenge will continue to provide valuable insight for entities considering M&A transactions. Moving forward, merging parties should be prepared to overcome presumptions that arise in transactions that meet the Merger Guidelines.


  • Dima Hanna

    Dima Hanna joined the TALG Irvine office in 2021. Dima was born and raised in Dubai, United Arab Emirates and relocated to Orange County, California, to attend Chapman University, where she graduated cum laude with a Bachelor of Science in Business Administration, International Business emphasis, and a minor in Sociology. Dima thereafter graduated from Southwestern Law School in Los Angeles, California, where she received her Juris Doctorate with a concentration in Civil Litigation and Advocacy. During her time at law school, Dima gained diverse experience while clerking for the Los Angeles District Attorney’s family violence unit, along with time spent in firms specializing in family law, personal injury, and criminal defense. Dima was also a member of the Entertainment Law Society and a quarterfinalist in the 2019 annual Negotiations Honors Competition. At TALG, Dima’s main focus is corporate transactional law and intellectual property law, while also assisting with civil litigation. Dima continues to contribute her efforts to a Vietnamese orphanage, for which she participated in a month-long Service Trip to Vietnam, and volunteers for the Lebanon Relief Center during her yearly visits home. In addition to this, Dima enjoys international travel and continually exploring new cultures. She is bilingual in Arabic and English, and spends her free time boxing, skiing, and attending live music events.

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