The ambitious $25 billion merger plan between Kroger and Albertsons fell apart after two judges, one from federal court and one from Washington state, rejected the grocers’ claims about enhancing competition, according to antitrust specialists.

Experts in antitrust law pointed out several key reasons that led the judges to reject the merger:

Judges Disagreed on Competitive Landscape

Initially, Kroger, headquartered in Cincinnati, and Albertsons from Boise, Idaho, argued that merging was vital to remain efficient and competitive against nontraditional rivals like Walmart, Costco, Amazon, Aldi, Trader Joe’s, and Dollar General. Their main point emphasized that regulators were viewing the grocery market too narrowly and not accounting for these alternative competitors.

However, the legal framework applicable to the merger identified competitors as traditional supermarkets or supercenters like Walmart. Neither judge found sufficient reason to alter this perspective. By narrowing the definition of competition, the merger risked reducing consumer choices and potentially driving prices up.

“Traditional full-service grocery stores formed the relevant market… excluding nontraditional competitors gave the merging parties a substantial market share,” noted William Kovacic, director of the Competition Law Center at George Washington University.

Douglas Ross, an expert in antitrust law at the University of Washington, concurred, explaining how the limited definition of competition led judges to determine that the merger posed a significant threat to market competition.

“They both agree on defining the market as supermarkets and not something broader,” Ross stated. “They recognized that there are various regional markets where this merger would lead to excessive concentration.”

Judges Skeptical of C&S Wholesale’s Potential

Another critical aspect that led to the merger’s failure was Kroger and Albertsons’ plan to maintain competition in overlapping markets. They proposed selling off 579 stores to New Hampshire’s C&S Wholesale Grocers for $2.9 billion.

The issue arose from C&S Wholesale’s small number of retail stores—fewer than 24—which did not instill confidence in its capability as a serious competitor. Additionally, its inconsistent track record of acquiring, selling, or shutting down grocery outlets raised eyebrows. A lawyer representing regulators even labeled C&S as more of a “liquidator” than a true operator.

The judges considered this evidence, leading to doubts about the viability of the proposed divestiture, said experts.

“The proposed buyer was deemed critically inadequate. This undermined the proposed solution,” Kovacic explained.

Judges Reverted to Conventional Antitrust Arguments

While regulators highlighted concerns that the merger could adversely affect workers’ bargaining power, experts pointed out that the judges did not extensively address these worries in their decisions. The FTC had raised a theory suggesting that the alliance would create a “monopsony” situation for union grocery workers, an argument that some believed lacked solid legal groundwork.

A monopsony occurs when a single company dominates a market as a major buyer, thereby lowering prices—essentially the opposite of a monopoly, where a company controls sales and raises prices. Regulators expressed concern that Kroger, as the largest employer of unionized grocery workers, could suppress wages.

Nevertheless, the judges’ reliance on traditional local market conditions made their decisions less vulnerable to reversal in potential appeals, according to experts.

“Because the rulings were rooted in classic antitrust principles, they are harder to appeal,” remarked Christine Bartholomew, a law professor at the University at Buffalo. “They avoided labor issues, opting for a more straightforward, less politically tumultuous interpretation of antitrust laws.”