WASHINGTON (Reuters) -U.S. District Judge Adrienne Nelson on Monday set Aug. 26 as the start of a hearing on the Federal Trade Commission's bid for a preliminary injunction to block supermarket chain Kroger's $24.6 billion deal to buy smaller rival Albertsons.

The FTC sued last month to block the deal that would create a supermarket empire with more than 4,000 stores, saying it would boost grocery prices for millions of Americans. The tie-up has drawn tough scrutiny from lawmakers and consumer groups worried about higher grocery prices, job losses and store closures.

Nelson of the U.S. District Court in Portland, Oregon said both sides must file a proposed briefing schedule by Friday.

Kroger said last week it was committed to defending the Albertsons merger in court following the U.S. FTC lawsuit, with Kroger CEO Rodney McMullen saying the company believes "this is the best outcome for America's families." The companies cannot close the deal with the legal challenges pending.

The FTC and eight states challenged the deal, which would strengthen Kroger's position as the second largest player in the U.S. grocery market behind Walmart.

The FTC's lawsuit comes at a time when the Biden administration has pressed for lower grocery prices and pushed back against big-ticket mergers that risk price hikes, affecting consumers in areas ranging from medicines to airlines.

The FTC said the deal first announced in October 2022 would eliminate fierce competition between Kroger and Albertsons.

But Kroger has defended its business model, saying it has reduced prices every year since 2003 and that strategy would be applied to the merged company.

Kroger, the biggest grocer in the U.S. by revenue, has proposed to divest 413 stores and eight distribution centers to C&S Wholesale Grocers, and said it may need to shed an additional 237 stores to gain regulatory approval.

The FTC called that proposal inadequate.