Kroger Co. said Monday that it had asked the court to stop a Federal Trade Commission administrative proceeding that was questioning the grocery store chain’s deal to join with Albertsons Cos. Inc. The company said that the FTC’s use of in-house courts in the case was an excessive use of government power.
Kroger KR -0.68% said that the FTC’s action to stop the merger was against the Constitution because the judge in charge of the case was “not removable by the President of the United States.” It also said that the federal court system, not the agency’s own court system, was the right place to fight about the deal’s pros and cons.
The company also said the agency broke the Constitution by “trying to handle Kroger’s private rights to make a deal with another private party through the Executive Branch instead of the separate Judicial Branch.”
In February, the FTC and several state attorneys general sued to stop the $24.6 billion deal that the two grocery chains made in 2022. They said it would make the supermarket business much bigger than it is now, which would hurt competition and raise prices after two years of rising food costs. Vice President Kamala Harris, who is running for president as a Democrat, recently called for a government ban on grocery and food price gouging.
Kroger has said that users will save money when they merge with Albertsons ACI -0.26%. It was said on Monday that the FTC had tried to confuse two different courts with its efforts to stop the deal so that it could have more chances to pursue the same problems.
The chain also said that the FTC asked a federal court to stop the merger while the administrative process plays out. The chain said that the matter would “likely take several years to resolve.”
“We are ready to defend this merger in the upcoming trial in federal court, which is the right place for this case to be heard,” Kroger CEO Rodney McMullen said in a statement. “We are asking the Court to stop what amounts to an illegal proceeding before the FTC’s own in-house tribunal.”
The FTC didn’t want to say anything.
To get a preliminary order, Kroger went to the U.S. District Court for the Southern District of Ohio and signed it. For the federal court case, Kroger said that arguments on the evidence will take place on August 26 in the District of Oregon.
In recent years, there have been more challenges to the administrative law judges that government agencies use to make sure rules are followed. In June, the Supreme Court said that the SEC’s use of “in-house courts” was improper and against the Constitution. Businesses such as Amazon.com Inc.
SpaceX, Starbucks Corp. SBUX 0.04%, and Amazon.com Inc. AMZN 0.25% have also said that the National Labor Relations Board is illegal, in part because the judges on the board are hard to remove.
The deal to join Kroger and Albertsons was put on hold last month while they waited for a court decision on a lawsuit from the state of Colorado to stop the deal.
Kroger stock is up 15.4% so far this year, but it closed down 0.8% on Monday. Albertsons stock finished the day 0.3% higher, but it is down 9% for the year.
