Kroger begins court fight with Federal Trade Commission over Albertsons deal

Kroger (KR) on Monday began its fight in court with the Federal Trade Commission over it $24.6 billion purchase of competitor Albertsons (NYSE:ACI) nearly two years after the deal was announced.

The trial is expected to last until Sept. 13 in Portland, Oregon federal court in front of Judge Adrienne Nelson. The trial started about 9:25am local time in Portland.

The FTC sued to block the combination in February, saying the supermarket deal would lead to higher prices for consumers. Eight states and Washington, D.C. also teamed up with the regulator to halt the deal. Colorado and Washington also separately filed lawsuits to try to put an end to the deal.

“This multibillion dollar deal would result in Kroger swallowing Albertsons and would eliminate the competition between these two companies that shopper and union workers depend on in one fell swoop,” a lawyer for the FTC said in her opening statements on Monday. “Stopping this multibillion dollar deal will keep in place vigorous competition that acts as a check on rising grocery prices and spurs improvements in quality and innovation.”

The supermarket chains argue that they need to get bigger to better compete with Walmart (WMT), Target (TGT) Amazon (AMZN) and Costco (COST). They also say that through the divestiture of nearly 600 stories to C&S Wholesale Grocers they will be creating a viable competitor in the supermarket space.

Shares of Albertsons (ACI) ticked down by 0.4% on Monday.

If the FTC wins and the supermarket operators decide to terminate the deal, Albertsons (ACI) may have downside to $19 a share, its standalone value, Morgan Stanley analyst Simeon Gutman wrote in a note last month. A $19 share price represents 9% downside from its current price on Monday, though is well below the announced deal at $27.25 a share.