Monopoly Round-Up: Kroger-Albertsons Trial Starts Tomorrow

Over the next few weeks, big antitrust cases are in the courtroom. There's the Kroger-Albertsons hearing starting tomorrow, and two trials for Google.

Today’s round-up for paid subscribers has lots of good stuff, as usual. But before I get to that, I want to preview a couple of legal actions starting this week. The first is the $24 billion Kroger-Albertsons supermarket merger trial, which starts tomorrow in Portland and goes until September 13th. The second is the Google adtech trial, which isn’t going to start for a few weeks, but has a sanctions hearing on Tuesday to see if Google’s general counsel Kent Walker gets held accountable for telling employees to auto-delete documents.

We’ll start with Kroger-Albertsons, which is technically a hearing for a preliminary injunction, but is mostly going to seem like a merger trial. Because of the importance of this case, and because Kamala Harris has made high food prices and pricing power a centerpiece of her campaign, it’s likely this trial will be widely reported. There is unfortunately no audio streaming, except for opening and closing statements, which you can listen to at 877-336-1831 tomorrow at noon ET. I might get some reporting from the courtroom for BIG.

So what are the stakes? The merging supermarket chains are two of the largest food buyers and sellers in the U.S., collectively owning a little over 5,000 stores (though they are planning to divest 579 stores where they overlap, to a distributor called C&S Wholesale Grocers.) If they win their case, then the entire food system will consolidate even further. If they lose, then consolidation stops, and the leaders of these corporations will be supremely embarrassed. Resignations often follow failed mergers.

To give you a sense of how important this deal is for the executives involved, so far the two companies have spent $864 million on merger costs alone, which is 3.5% of the total value, and enough for a $1200 bonus for each employee. Why is it so expensive? Well, partly because it’s taken two years of legal work, and the teams these firms have doing it are immense and well-paid.

Albertsons has a local law firm, plus D.C. powerhouses Williams & Connolly, Dechert, and Debevoise & Plimpton. Kroger also has a local attorney, and teams from Arnold and Porter and Weil Gotshal. Partners in these firms bill out at $2400/hour. It’s not all labor costs, of course, as one rumor is their legal team is staying at the Ritz in Portland, so some goes to lodging.

Kroger-Albertsons also faces a state merger trial in Washington and one in Colorado as well. If you want to read legal filings from the case, you can get most of them here for free.

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Google Deleting Documents: The Walker Memo

Next month, the big trial on Google’s control of online display advertising - basically what newspapers finance themselves with - starts in force. But like multiple other Google antitrust trials, in this one, the judge is dealing with Google’s general counsel Kent Walker’s order to employees to automatically delete documents that should have been retained during an antitrust investigation.

On Tuesday, Judge Leonie Brinkema will hold a hearing on a motion for ‘adverse inference,’ which is to say, a request by the Department of Justice and states for the judge to assume Google hid stuff in bad faith and that she should put her thumb on the scale for the government. I’ll be heading to the court to watch.

Before getting to allegations of misconduct by Google, let’s start with a basic question. There have already been two antitrust cases against the search giant, one on app stores and one on search. (The remedy phase for the search trial starts next month.)

What’s this third trial about? Well, it’s on the plumbing that organizes online advertising that ISN’T search ads. That is, it’s about the Google software newspapers use to sell their ad space, the Google software ad buyers use to buy it, and the Google exchange in the middle. And hidden in this technocratic wonkery is the reason that the free press has died.

Google runs online display advertising like a financial market where they get 30-50% of the take. Or as Google puts it, they are the ‘operating system’ for marketers and publishers.

A lot of documents were just unsealed on Friday, I’ll be going over them. Digital Content Next’s Jason Kint already has, and did a great twitter thread on what he found. Here’s one slide. “Basically Google sees 84% of the addressable ad market. That's insane.”

Ok, so all that said, there isn’t going to be salacious quotes (or ‘hot docs’) in this trial, because Google employees deleted the juiciest conversations, on orders from Kent Walker. In 2008, as Lee Hepner put it, “Google's Chief Legal Officer Kent Walker created a ‘Communicate with Care’ policy advising employees to move sensitive litigation chats to ‘history off’ mode.” The policy was designed to "help avoid inadvertent retention of instant messages" in light of "several significant legal and regulatory matters," aka antitrust cases.

The result are chats like this. (Here’s a long list of similar chats the judge just unsealed where Google employees tell one another “oh we should turn off chat history now.”)

Walker has been reprimanded by multiple judges, because Google has not preserved records it was legally obligated to. We’ll see if it happens again. I’m guessing Judge Brinkema doesn’t mess around, but I haven’t seen her in action.

Ok, here’s the rest of the monopoly-related news, after the flip.