FTC Files Lawsuit to Halt Kroger-Albertsons Merger
After much speculation that it would do so, the Federal Trade Commission (FTC) and nine state attorneys have sued to stop the proposed merger between The Kroger Co. and Albertsons Cos. According to the FTC, the $24.6 billion merger and divestiture proposal with C&S Wholesale Grocers "falls far short of mitigating the lost competition between Kroger and Albertsons."
Attorney generals of Arizona, California, Washington, D.C., Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming have joined the lawsuit filed by the FTC.
Following news of the lawsuit, Kroger and Albertsons released separate statements asserting that the merger would expand competition, lower prices, increase associate wages, protect union jobs and also enhance customers’ shopping experience.
“If the Federal Trade Commission is successful in blocking this merger, it would be hurting customers and helping strengthen larger, multi-channel retailers such as Amazon, Walmart and Costco – the very companies the FTC claims to be reining in – by allowing them to continue increasing their growing dominance of the grocery industry,” said an Albertsons Cos. spokesperson. “In contrast, Albertsons Cos.’ merger with Kroger will ensure our neighborhood supermarkets can better compete with these mega retailers, all while benefitting our customers, associates and communities. We are disappointed that the FTC continues to use the same outdated view of the U.S. grocery industry it used 20 years ago, and we look forward to presenting our arguments in Court.”
A Kroger spokesperson shared that “Kroger’s business model is to take costs out of the business and invest in lowering prices for customers. Kroger has reduced prices every year since 2003, resulting in $5 billion invested to lower prices and a 5% reduction in gross margin over this period.”
Continued the spokesperson: “The FTC’s decision makes it more likely that America’s consumers will see higher food prices and fewer grocery stores at a time when communities across the country are already facing high inflation and food deserts. In fact, this decision only strengthens larger, non-unionized retailers like Walmart, Costco and Amazon by allowing them to further increase their overwhelming and growing dominance of the grocery industry.”
Meanwhile, after a yearlong investigation, Colorado Attorney General Phil Weiser filed a lawsuit in Denver District Court on Feb. 15 to block the merger. Kroger operates more than 140 King Soopers and City Market stores, while Albertsons runs 100-plus Safeway and Albertsons stores in the state.
According to the lawsuit, the merger would eliminate head-to-head competition between Kroger and Albertsons and consolidate an already concentrated market.
“Coloradans are concerned about undue consolidation and its harmful impacts on consumers, workers and suppliers,” said Weiser. “After 19 town halls across the state, I am convinced that Coloradans think this merger between the two supermarket chains would lead to stores closing, higher prices, fewer jobs, worse customer service and less resilient supply chains.”
In addition to Colorado, Washington state Attorney General Bob Ferguson also filed a lawsuit last month to block the proposed Kroger-Albertsons merger, because of harm to consumers and higher prices.
Although it had to delay its merger/divestiture plans due to continuing dialog with regulators, Kroger is pushing back against claims that it will raise prices. The nationwide retailer recently shared insights into how it lowered prices in previous mergers, along with its commitment to do the same after this latest deal goes through.
“We believe the way to be America’s best grocer is to provide great value by consistently lowering prices and offering more choices,” said Kroger Chairman and CEO Rodney McMullen. “When we do this, more customers shop with us and buy more groceries, which allows us to reinvest in even lower prices, a better shopping experience and higher wages. We know this model works because we’ve been doing it successfully for many years, and this is exactly what this merger will bring customers – lower prices and more fresh, affordable choices.”
The United Food and Commercial Workers International Union (UFCW), which represents 1.2 million essential workers in grocery, meatpacking, food processing, and other essential industries across North America, lauded the FTC's move.
“The FTC’s decision reflects clear concerns over the impact such a megamerger could have on workers, food prices, and millions of customers. As our delegates made clear last year at our International Convention, the UFCW stands — and will continue to stand — in opposition to any merger that would negatively impact our hundreds of thousands of hard-working members who work at Kroger and Albertsons."
Additionally, the American Economic Liberties Project responded to the news with a statement asserting that the FTC is helping to keep grocery bills down and workers in their jobs.
“From higher prices for consumers, worse wages and benefits for workers, a tighter squeeze on producers and farmers, to an increased risk of grocery and pharmacy deserts across the 48 states this merger affects, the harms of this deal were clear from the start,” said Morgan Harper, director of policy and advocacy at the American Economic Liberties Project. No divestiture or concession would make it work — which is why over 100,000 workers and countless advocates have spoken out against this disastrous merger. Kroger and Albertsons would be wise to save everyone’s time and abandon this deal.”
Nearly half a million associates of Cincinnati-based Kroger serve more than 11 million customers daily through a digital shopping experience and retail food stores under a variety of banner names. The company is No. 4 on The PG 100, Progressive Grocer’s 2023 list of the top food and consumables retailers in North America. Boise, Idaho based Albertsons operates 2,200-plus retail food and drug stores with 1,726 pharmacies, 401 associated fuel centers, 22 dedicated distribution centers and 19 manufacturing facilities. It's No. 9 on The PG 100. Keene, N.H.-based C&S services customers of all sizes, supplying more than 7,500 independent supermarkets, chain stores, military bases and institutions with 100,000-plus products, in addition to operating corporate stores. The company is No. 17 on The PG 100.
