Kroger and Albertsons have entered a high-stakes legal battle over the collapse of their proposed $24.6 billion supermarket merger, a deal that would have created the largest grocery retailer in the United States. The trial began this week in Delaware and is expected to last two weeks, featuring testimony from former Kroger CEO Rodney McMullen and Albertsons chief Susan Morris.

The merger, agreed upon in 2020, aimed to unite Kroger’s and Albertsons’ roughly 5,000 stores to better compete with major retailers such as Walmart, Costco, and Amazon. Albertsons’ private equity owner, Cerberus Capital Management, sought to solidify billions in gains accumulated over more than a decade. However, the Federal Trade Commission (FTC), along with multiple states, filed lawsuits in 2024 to block the merger, citing concerns about reduced competition, potential price increases, and diminished union bargaining power.

The legal proceedings revolve around the firms’ conflicting accounts of why the deal fell apart. Albertsons accuses Kroger of failing to fulfill its contractual obligation to pursue regulatory approval “by any and all actions,” arguing that Kroger submitted insufficient divestiture proposals and resisted selling higher-performing stores to regulators. In a recently unsealed pretrial filing, Albertsons contended that Kroger dismissed specific FTC suggestions as a “Christmas List” and limited divestitures to lower-value assets.

Albertsons is seeking more than $9 billion in damages, including costs related to the failed deal. It also highlighted a controversial $4 billion dividend Albertsons declared to investors while the merger was pending, which Kroger claims aggravated regulatory opposition and contributed to an adversarial environment. Albertsons maintains that the dividend was permitted under the merger agreement.

Kroger denies breaching the merger contract and refuses to pay a $600 million termination fee, asserting that Albertsons itself violated the agreement. It also alleges that Albertsons engaged in unauthorized communications with potential buyers of divested stores, undermining the deal. Kroger maintains it invested over $1 billion defending the merger but was unable to satisfy regulators who rejected the argument that Amazon, Walmart, and Costco should be considered competitive alternatives rather than traditional grocers.

The FTC’s challenge to the merger was one of the most significant enforcement actions under Chair Lina Khan during the Biden administration’s intensified scrutiny of large corporate mergers. Despite Albertsons’ offer to reduce the purchase price by more than $800 million in an attempt to facilitate additional store divestitures, Kroger reportedly did not present the offer to its board. McMullen resigned in 2025 following unrelated personal conduct investigations.

Since the deal’s collapse, Albertsons shares have declined more than 30 percent. The company’s incoming chair, Meg Whitman, has pledged to focus on a turnaround amid ongoing uncertainty. This lawsuit underscores the complex challenges faced by companies attempting to navigate antitrust regulations and raises questions about accountability when major deals fail amid regulatory resistance.