CINCINNATI — The Kroger Co. filed a motion on Aug. 19 for a preliminary injunction against the Federal Trade Commission’s (FTC) administrative proceeding challenging the retailer’s merger deal with Albertson’s Co. Inc.
In February, FTC sought to block the $25 billion deal struck between Kroger and Albertson’s that it believed to be anticompetitive by filing a lawsuit in federal court as well as an administrative complaint scheduled to go before an administrative judge.
Last month, both Kroger and Albertsons agreed to halt the merger until the courts finalized its decision on the pending deal.
According to Kroger, the administrative proceeding violates constitutional protections, namely those in Article II and Article III.
Based on a previous Supreme Court ruling in Free Enterprise Fund v. Public Company Accounting Oversight Board, Kroger claims FTC violates Article II because the administrative law judge presiding over the proceeding is not removable by the president of the United States.
The second argument Kroger makes against the FTC’s violations of the Constitution is based on a more recent Supreme Court decision. The company argues that by seeking to adjudicate Kroger’s private rights to contract with another private party administratively through the executive branch rather than in the independent judicial branch, FTC violates Article III. This standard was reinforced this past term by the Supreme Court in SEC v. Jarkesy, which demonstrated private rights — including life, liberty and property — may be adjudicated only by the federal judiciary and not by administrative agencies.
“The FTC has sought to split its challenge to the merger into two separate tribunals in an inappropriate attempt to receive multiple opportunities to litigate the same issues,” Kroger said. “Despite forcing Kroger to participate in this unconstitutional administrative proceeding, the FTC has also filed a motion in the federal court proceedings seeking to block the merger for the duration of its administrative proceeding, which will likely take several years to resolve.”
The evidentiary hearings for the federal court proceeding will commence on Aug. 26 in the District of Oregon.
“The merger between Kroger and Albertson’s is squarely focused on ensuring we bring customers lower prices starting day one while securing the future of good-paying union jobs,” said Rodney McMullen, chairman and chief executive officer of Kroger. “We stand prepared to defend this merger in the upcoming trial in federal court — the appropriate venue for this matter to be heard — and we are asking the Court to halt what amounts to an unlawful proceeding before the FTC’s own in-house tribunal.”