The combination of the country’s two largest supermarket chains would create a $200 billion company, with about 5,000 stores in 48 states and the District of Columbia.

A federal judge today temporarily blocked what would be the biggest grocery store merger in U.S. history, siding with the Federal Trade Commission in its lawsuit seeking to halt the deal.

The preliminary injunction issued by Judge Adrienne Nelson marks a win for federal regulators who have argued that Kroger’s $24.6 billion acquisition of Albertsons, a rival grocery chain, would risk reducing competition at the expense of consumers and workers. Albertsons’ holdings include the Safeway grocery store chain.

Her ruling, which came about three months after a hearing that featured testimony from top executives and economic experts, put the merger on shaky ground as it heads to the FTC’s internal administrative process, which could determine the fate of the deal. The two companies are also defending the merger in two other lawsuits filed in state courts.

The companies could choose to abandon their merger because of the preliminary injunction, but the order “in no way forces them to do so,” Nelson said in her decision, stressing that the companies could still pursue the deal if it is deemed lawful in the FTC’s administrative proceedings. “An injunction simply pauses the merger,” she said.

The combination of the country’s two largest supermarket chains would create a $200 billion company, with about 5,000 stores in 48 states and the District of Columbia. The FTC filed an antitrust lawsuit in federal court in Portland, Oregon, to block the merger, about a year and a half after it was announced. The FTC was joined by the attorneys general of eight states, including California and Illinois, and the District of Columbia. It was part of a regulatory push under the Biden administration to rein in corporate consolidation in an array of industries, including airlines, Big Tech, book publishing and pharmaceuticals.

Nelson’s decision “protects competition in the grocery market, which will prevent prices from rising even more,” Douglas Farrar, a spokesperson for the FTC, said in a statement. “This statement win makes it clear that strong, reality-based antitrust enforcement delivers real results for consumers, workers and small businesses.”

The FTC’s case was the first challenge to the deal to go to court; separate state hearings in Washington state and Colorado wrapped up in October. The judge presiding over the case filed by Washington state’s attorney general is expected to issue a decision Tuesday afternoon.

The grocery industry has experienced waves of consolidation since the 1990s. Now just four companies — Walmart, Kroger, Costco and Albertsons — account for about half of all grocery sales. Consolidating Kroger and Albertsons would reduce head-to-head competition in over 1,000 communities, resulting in higher prices and lower quality, the FTC argued in its post-hearing brief.

When asked about the lawsuits on an earnings call last week, Rodney McMullen, Kroger’s CEO, told investors that the company was “super excited about Albertsons and the potential,” but that if the deal were to be blocked, “we’ll continue to go on.”

“I don’t know that we would be out there trying to find what’s the next Albertsons,” McMullen said. “We’ve always made sure that we don’t need to do mergers to make our business successful.”

The companies defended the merger before Nelson of U.S. District Court in Oregon, arguing that it would lead to lower prices and that the combined company could better compete with bigger rivals such as Walmart, Amazon and Costco. Vivek Sankaran, the CEO of Albertsons, said the chain could be forced to close stores and lay off workers if its merger with Kroger was blocked.

“We hope to chip away at the bigger target, which is Walmart,” Tony Silva, vice president of strategic initiatives at Albertsons, testified in court.

Walmart alone accounts for around 22% of U.S. grocery sales. Combined, Kroger and Albertsons would account for about 13%.

The FTC lawyers countered that the chains’ promises to lower prices would not be legally enforceable, and in some markets, less competition in certain markets would give Kroger leverage to raise prices on millions of shoppers.

“Circumstances change and executives have a fiduciary duty not to shoppers, but to shareholders,” Susan Musser, a lawyer for the FTC, said during closing statements.

Debates over how the deal might affect the combined companies’ roughly 700,000 employees, the majority of whom are unionized, were also aired in the courtroom. The FTC argued that the merger would reduce the bargaining power of unions, as they would no longer be able to leverage competition between the grocery giants to secure better pay and benefits for their members.

In court testimony, however, Kroger’s head of labor relations countered that unions would still have a range of tools to employ at the bargaining table after the merger.

The preliminary injunction issued by Nelson would typically spell the end of the merger, said Rebecca Haw Allensworth, a law professor at Vanderbilt University who teaches antitrust. But a series of additional lawsuits, combined with Kroger’s dogged efforts to push for the deal, have cast uncertainty over the companies’ and the FTC’s next steps.

The FTC is preparing to move forward with a separate internal proceeding seeking to block the deal. But in August, Kroger sued the FTC, calling its administrative proceedings unconstitutional in an attempt to thwart the in-house tribunal.

“Big picture, a preliminary injunction means the deal is dead,” Allensworth said. “It’s just that there’s all these new moving parts that make it harder to predict what will happen.”

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This article originally appeared in The New York Times.

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