KROGER IN COURT: Albertsons Argues for Merger
Opening statements were heard today in the Federal Trade Commission’s (FTC) lawsuit against the proposed $24.6 billion merger between The Kroger Co. and Albertsons Cos. U.S. District Judge Adrienne Nelson of Oregon is overseeing the FTC’s request for preliminary injunction against the merger, which, if granted, would put the merger on hold while the FTC undertakes an administrative hearing against the deal.
In her opening remarks, FTC Chief Trial Counsel Susan Musser focused on the idea that the merger would reduce business competition “that acts as a check on rising grocery prices and spurs improvements in quality and innovation.”
Musser further asserted that workers’ wages and benefits would suffer under the proposed tie-up, and also stated that C&S Wholesale Grocers, the proposed beneficiary of 579 divested Kroger and Albertsons stores, will be less competitive than the two grocers currently are in certain markets, and also lacks the experience necessary to properly care for its workforce.
“This lawsuit is part of an effort aimed at helping Americans feed their families,” Musser said.
Meanwhile, Matthew Wolf, legal counsel for Kroger, contended in his opening statement that price reductions would happen immediately on the items that American families need most if the merger is approved. Additionally, he shared that collective bargaining agreements with local unions will be transferred and maintained.
Enu Mainigi, partner at Williams & Connolly, represented Albertsons in the proceeding and took the floor to further explain that it only benefits the two grocers to lower prices because of similar moves from their competitors, and that the scale that will be gained by the merger will allow them to better compete with the likes of Walmart, Amazon and Costco, and continue to lower prices.
Mainigi further described the need to take a more holistic look at discount food retailers including ALDI, Lidl, Dollar General and others to get a better view of who dominates the industry and how today's shoppers spread out their grocery spend.
According to Albertsons’ counsel, the decision to merge with Kroger was not made lightly, but offered the best opportunity for the company to ensure long-term competitiveness. In addressing a future where the merger does not go through, she said layoffs, store closures, or even exiting certain markets could occur.
“These are the kind of things that are on the table if the measure does not go through and we recognize, as a company, the disruption that happens at the community level and the impact on our customers, our employees, their families, and the broader community with these kinds of changes,” Mainigi explained. “And we hope we don't have to get there.”
Ahead of the hearing, members of the United Food and Commercial Workers International (UFCW) union held a press conference outside the courthouse to voice their opposition to the merger.
In a prepared statement, Kroger Chief People Officer Tim Massa reiterated that the merger will lead to “lower prices for more customers, higher wages for associates, and expanded food access in more communities.”
Continued Massa: “Our merger will secure the long-term future of union jobs by building on Kroger’s track record of adding 100,000 union jobs since 2012 while union membership in the grocery industry was declining by hundreds of thousands of members. Kroger, Albertsons and C&S are committed to honoring all current collective bargaining agreements alongside bargained-for wages and benefits and ensuring zero frontline worker layoffs and no store closures as a result of the merger.”
The current hearing is expected to last three weeks, after which Judge Nelson will decide whether or not to grant the preliminary injunction against the proposed merger.
Cincinnati-based Kroger is No. 4 on The PG 100, Progressive Grocer’s 2024 list of the top food and consumables retailers in North America. View company website. Boise, Idaho-based Albertsons is No. 9 on The PG 100. View company website. PG also named Kroger and Albertsons among the Retailers of the Century. Keene, N.H.-based C&S is No. 18 on PG’s list.
