A federal judge has blocked Kroger‘s $24.6 billion acquisition of Albertsons on Tuesday (December 10th)Bloomberg reported that the agreement would reduce competition in the US grocery market and feared that the agreement would lead to a reduction in competition.

U.S. District Judge Adrienne Nelson decided in favor of Federal Trade Commission (FTC), which had argued that the merger would harm consumers by reducing competition, particularly through insufficient divestitures of businesses C&S food wholesaler. Nelson noted that the divestitures occurred not substantial enough to compensate for the loss of competition and warned that some of the divested stores could close or lose sales.

“There is ample evidence that the size of the divestment is not sufficient in order to be able to adequately compete with the merged company and is structured in a way that puts C&S at a significant disadvantage as a competitor,” said Nelson wrote. “The deficiencies in the scope and structure of the divestiture create the risk that some or all of the divested stores may lose sales or close, as was the case with previous C&S acquisitions.”

Despite the setback Shares of Kroger rose 6.1% while shares of Albertsons fell 10%. The verdict probably signals the end two-year merger attemptwith Kroger and Albertsons probably They refocus their attention on improving their existing processes. Kroger, which has about 2,750 stores, will focus on investing in its network, while Albertsons may explore other strategic options, including the possibility of becoming a new acquisition target.

The planned merger which was first announced in 2022tried to create a formidable competitor for non-union rivals like Walmart. However, the deal fell through Opposition from politicians, unions and consumer groups, Bloomberg reported. Critics argued that restricting grocery store choices and increasing prices would harm consumers. The FTC alleged that the merger would reduce competition in the supermarket sector. The judge agreed with this opinion and rejected the companies’ argument that the market was expanding to include online retailers Amazon.

If Kroger announced its third quarter results Dec. 5, CEO Rodney McMullen insisted that the merger would be approved.

“The food industry has always been competitive and will continue to be so to be after this merger,” McMullen specified. “We are committed to completing this merger because bringing Kroger and Albertsons together will bring significant and measurable benefits – lower prices, secure jobs.” And expanded access to fresh, affordable food – for customers and employees And communities across the country.”