As part of its initiative to acquire Albertsons Cos., The Kroger Co. has filed a motion for preliminary injunction in the United States District Court, Southern District of Ohio, against the U.S. Federal Trade Commission’s administrative proceeding challenging the companies’ merger.
Kroger took the position that, in proceeding with its administrative tribunal, in addition to a separate action in federal court, the FTC is violating protections provided by the U.S. Constitution.
According to Kroger, the motion details its position as to how the FTC’s administrative proceeding against the merger violates the Constitution in two areas. First, the company is arguing the FTC violates Article II of the U.S. Constitution because the administrative law judge presiding over the administrative proceeding is not removable by the president of the United States. The company maintains the principle regarding presidential removal is consistent with and applied by the Supreme Court in Free Enterprise Fund versus Public Company Accounting Oversight Board in 2010.
Second, Kroger contends the FTC violates Article III of the Constitution by seeking to adjudicate the company’s private rights to contract with another private party administratively through the executive branch rather than in the independent judicial branch. The Supreme Court reinforced a standard in SEC versus Jarkesy during its last term that favors a judicial course, Kroger asserted.
The FTC, Kroger added, has inappropriately sought to split its challenge to the merger into two separate tribunals in an attempt to take multiple opportunities to litigate the same issues. Despite forcing Kroger to participate in the 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, the company asserted, which will likely take several years to resolve. Current scheduling calls for the evidentiary hearings for the federal court proceeding to begin August 26 in the District of Oregon.
“The merger between Kroger and Albertsons is squarely focused on ensuring we bring customers lower prices starting day one while securing the future of good-paying union jobs,” Rodney McMullen, Kroger chairman and CEO. “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.”
