The collapse of the proposed mega-merger between Kroger and Albertsons—a deal that once promised to reshape the American grocery landscape—is now descending into a complex legal battle involving counterclaims, finger-pointing, and accusations of regulatory misjudgement. At the heart of the dispute is whether either party truly acted in “good faith” during their pursuit of federal approval—and whether the Federal Trade Commission (FTC) ever intended to greenlight such a merger in the first place.
This week, Albertsons Cos. filed a pointed rebuttal to Kroger’s counterclaims, rejecting accusations that it secretly worked with C&S Wholesale Grocers to pursue its own divestiture strategy, and instead placing the blame for the merger’s demise squarely at Kroger’s feet.
The Background: A Deal of National Significance
When Kroger and Albertsons announced their proposed $24.6 billion merger in October 2022, it immediately caught the attention of both Wall Street and Washington. The move, which would have created the second-largest grocery chain in the United States after Walmart, faced heavy scrutiny from labour unions, lawmakers, and the FTC, who feared it would reduce competition, lead to higher prices, and result in mass layoffs.
To assuage antitrust concerns, the two retailers put forward a divestiture plan involving the sale of nearly 600 stores to C&S Wholesale Grocers, a respected but largely regional distributor headquartered in Keene, New Hampshire. However, that plan was never enough to satisfy regulators. By early 2024, the FTC formally sued to block the merger, citing unacceptable risks to competition and consumer welfare.
Legal Firestorm: The Blame Game Begins
In the months since the FTC’s intervention, the would-be partners have turned on each other. In March 2025, Kroger filed a legal response to Albertsons’ earlier lawsuit, claiming that Albertsons had undermined the deal by engaging in covert negotiations with C&S—allegedly using private email accounts and personal phones to avoid detection.
Kroger accused incoming Albertsons CEO Susan Morris of communicating secretly with C&S leadership in a manner that suggested a separate regulatory strategy was in play—one that Kroger believed was never shared transparently. These actions, Kroger contends, violated the merger agreement’s terms and invalidated Albertsons’ claim to a $600 million termination fee.
Albertsons Responds: “Kroger Doomed Itself”
Albertsons’ latest court filing rejects these allegations outright, calling them an effort to “divert attention from Kroger’s own misconduct.” The company claims that all communications with C&S were known to Kroger and that the leadership transition to Morris had long been in the pipeline. Furthermore, Albertsons sharply criticised Kroger’s “disorganised, protracted” search for a divestiture buyer, arguing that it was this lack of planning that ultimately doomed the deal in the eyes of the FTC.
“Kroger advanced a self-serving strategy that impaired its credibility and doomed the prospects of a negotiated resolution with regulators,” said an Albertsons spokesperson in a statement sent to Progressive Grocer. “Albertsons worked steadfastly to increase the merger’s chance of success, even offering to contribute roughly $1–$2 per share in value to enhance the divestiture package. Kroger ignored those proposals.”
Albertsons argues that its leadership was fully committed to finalising the merger and that it offered meaningful concessions—only to be met by an uncooperative partner more focused on preserving financial interests than regulatory feasibility.
FTC at the Crossroads
The FTC’s lawsuit to block the merger earlier this year marked a significant assertion of its renewed antitrust authority under Chair Lina Khan, who has taken an aggressive stance against market consolidation, particularly in sectors deemed essential—like food, healthcare, and energy.
But many industry observers argue that the FTC was always unlikely to approve such a monumental merger in a climate of rising food prices and growing political pressure. Even with a carefully curated divestiture plan, the scale of the proposed combination may have simply been too large for approval.
C&S, for its part, has also joined the fray. The distributor, which stood to gain hundreds of stores as part of the divestiture deal, has filed its own claim, demanding $125 million in termination fees from Kroger. According to legal filings, C&S insists that Kroger had no justifiable grounds for walking away from their agreement and must now meet its financial obligations.
What Now?
The lawsuit between Albertsons and Kroger is expected to proceed over the coming months and could result in a dramatic trial involving high-level executives, confidential communications, and regulatory backchanneling.
What’s at stake isn’t just a termination fee—it’s the reputation of two legacy grocery chains, the future of large-scale consolidation in the supermarket industry, and the credibility of corporate leadership at a time when public trust is already low.
The FTC, meanwhile, will likely continue to defend its decision as being in the public interest. Whether it will ultimately succeed in stemming the tide of mega-mergers remains to be seen. But one thing is clear: the retail food landscape is changing—and not every company is aligned on how to navigate the new reality.