This briefing document examines Kroger's motion for a preliminary injunction against the FTC in the Southern District of Ohio, seeking to prevent the FTC from pursuing an administrative proceeding related to Kroger's proposed merger with Albertsons.
Kroger's central argument is that the FTC's administrative proceeding is unconstitutional on two grounds:
- Violation of Article II (Presidential Authority): Kroger argues that the structure of the FTC, specifically the two layers of for-cause removal protection afforded to ALJs, violates the President's Article II authority to oversee executive officers. The ALJs can only be removed for good cause by the Merit Systems Protection Board, whose members themselves enjoy for-cause removal protection from the President. Kroger cites Free Enterprise Fund v. Public Company Accounting Oversight Board, where the Supreme Court found a similar two-layer protection scheme unconstitutional, arguing that this structure prevents the President from holding executive officers accountable.
- Violation of Article III (Judicial Power): Kroger contends that the FTC's attempt to adjudicate its private rights (specifically, its ability to engage in the proposed merger) within the executive branch rather than in an Article III court is unconstitutional. Kroger asserts that the FTC is seeking to impair its private right to freely contract with Albertsons, a matter historically reserved for the judiciary. They further argue that Congress, by authorizing the FTC to seek permanent injunctions against mergers in federal court, has provided an alternative avenue for the FTC to address its concerns within the proper constitutional framework.
In addition to the constitutional arguments, Kroger also claims it will suffer irreparable harm if the administrative proceeding continues:
- Being Subject to an Unconstitutional Proceeding: Kroger, relying on Axon Enter., Inc. v. FTC, argues that being subjected to an unconstitutional proceeding constitutes a "here-and-now injury" that cannot be remedied later.
- Unrecoverable Costs: Kroger maintains that due to the federal government's sovereign immunity, it would be unable to recover the costs incurred while participating in the administrative proceeding.
- Ongoing Uncertainty: Even if Kroger prevails in the parallel federal court proceeding, the looming threat of the administrative proceeding creates uncertainty and could potentially unwind the merger years later, harming both Kroger and consumers.
Kroger argues that the balance of equities favors an injunction, as the FTC has alternative means to address its concerns through a federal court action, which Kroger is not contesting. They emphasize that blocking an unconstitutional proceeding serves the public interest and that the merger itself promises significant consumer benefits, including lower prices.
It is important to note that this briefing document is based solely on Kroger's motion for a preliminary injunction. The FTC will likely present counterarguments to these points.
