What we can expect in the Kroger-Albertsons trial in Oregon

A federal judge in Portland, Oregon, heard opening arguments Monday in a case challenging the merger of grocery giants Kroger and Albertsons. The hearing is crucial and could decide the direction of the merger.

“Usually, whoever wins this preliminary injunction phase wins the entire war,” says Douglas Ross, who teaches antitrust law at the University of Washington.

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The Federal Trade Commission (FTC), along with eight other states and the District of Columbia, is asking the judge to put the $24.6 billion deal on hold while an administrative hearing in Washington DC resolves a more important question: Is the merger even legal?

KUOW spoke with Ross about the Oregon hearing and other pending litigation related to the merger. The following conversation has been edited for clarity.

Why did the FTC file two lawsuits in two different jurisdictions?

Ross: “The FTC would prefer to stop a merger by filing suit in its own administrative proceeding and obtaining an order from an administrative judge. This is then presented to the full Federal Trade Commission, whose five commissioners will review the case and decide how to proceed.

The problem is that it will take months, if not a year or two, and until the final order is issued, the Federal Trade Commission will not be able to stop the two parties from moving forward with their merger.

In the meantime, they can ask the parties to cooperate and delay the merger while the litigation continues in Washington DC. And if the parties don't cooperate, they are forced to go to federal court and get an order blocking the merger. And that's exactly what they're doing.”

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The trial is expected to last three weeks. The FTC says Kroger's acquisition of Albertsons is anti-competitive and will lead to higher prices, hurting consumers. The companies are defending the deal, saying the merger would benefit shoppers and help the company compete against rivals like Walmart and Costco. How will the judge in the state of Oregon decide whether or not to stay the merger?

Ross: “Basically, it's a balancing act between the likelihood of the FTC winning its case and the public interest in letting the merger go through before the court proceedings are over. And the public interest in preventing the merger until the proceedings are over.”

If the Oregon court rules in favor of the FTC and the ruling is upheld on appeal, the case will go back to Washington, where the fate of the merger will be decided. But there is a new twist. Kroger recently filed suit in Ohio arguing that the FTC's administrative proceedings in Washington were unconstitutional. Why is Kroger pursuing this strategy?

Ross: “Over the last decade, the United States Supreme Court has challenged a number of administrative procedures. And Kroger looks at what the U.S. Supreme Court has said over the last few years, particularly a case that was decided just last term… [The] The Supreme Court said in this particular case that holding an administrative proceeding deprives the plaintiff of his right to a jury trial under the Seventh Amendment. Kroger is trying to use that precedent and say that private rights like the contract, the contract that the company entered into to acquire Albertsons, generally cannot be tried in administrative court.”