(Reuters) -The proposed $25 billion merger of Kroger (NYSE:KR) and Albertsons (NYSE:ACI) has been halted until the Colorado District Court rules on a lawsuit filed to block the deal that is expected to push up grocery prices, State Attorney General Phil Weiser said on Thursday.
"The trial is set to begin on Sept. 30 and my office looks forward to making the case that this merger will eliminate competition and impact food prices, jobs, and consumer choice," Weiser said in a statement.
Colorado's lawsuit, filed at the beginning of February, was earlier set for a hearing on Aug. 12. Washington State's attorney general was the first to challenge Kroger's proposed buying of smaller rival Albertsons in January.
The U.S. Federal Trade Commission and eight other states then separately said in late-February they were suing to block the supermarket mega-merger, which was announced in October 2022 and expected to create a grocery empire with more than 4,000 stores.
U.S. District Judge Adrienne Nelson in March had set Aug. 26 as the start of a hearing on the FTC's bid for a preliminary injunction to challenge the deal.
"Today's decision is welcome news as it eliminates the need for a preliminary injunction hearing in Colorado," a Kroger spokesperson said.
Albertsons is yet to respond to Reuters' request for comment.
Bloomberg News earlier reported that a Colorado District Court judge temporarily halted the deal at a hearing in Denver on Thursday and canceled the hearing set for next month.
Kroger and Albertsons had said in April they were expanding their planned sale of grocery stores to get regulatory approval and would offload 166 more locations than previously agreed upon to C&S Wholesale Grocers.
Shares of Kroger were down about 1%, while Albertsons was up marginally.