KROGER IN COURT: As One Trial Ends, Another Begins
The Kroger Co. rested its case on Sept. 12 in a Portland, Ore., courtroom during the trial that has the Federal Trade Commission (FTC) trying to block the grocer’s $24.6 billion merger with Albertsons Cos.
Kroger insists that it has addressed potential competitive concerns arising out of the merger through an arm’s-length divestiture with third-party grocery wholesaler C&S Wholesale Grocers LLC, including through an amended divestiture agreement that specifically responded to regulator concerns.
The national grocer reiterated its stance that the FTC’s view on grocery competition is flawed, as it limits grocery competition to “traditional supermarkets.” According to Kroger: “Anybody who sells food and grocery products is somebody we compete with today. From club stores to discount stores and dollar stores and natural and organic stores – it’s an extensive list.”
The FTC is also concerned about the potential merger’s impact on labor. The government has noted that the deal will reduce unions’ – specifically the UFCW’s – ability to use “whipsaw” tactics between Kroger and Albertsons. Kroger argued that the government’s “whipsawing” theories are detached from the realities of labor negotiations and do not reflect the competitive landscape of today.
[RELATED: The Merger's Impact on Grocery Workers]
The trial in Portland resumes on Sept. 13 with the government’s three rebuttal witnesses. Closing arguments in the case will be heard on Tuesday, Sept. 17.
As the Oregon trial comes to a close, Kroger is prepping for yet another case, this time in Washington state, beginning Monday, Sept. 16.
Washington State Attorney General Bob Ferguson filed a lawsuit on Jan. 15 to block the mega-merger. In the suit, Ferguson argued that the multibillion-dollar deal would harm consumers and raise prices.
However, Kroger contended that it is dedicated to helping consumers save. According to the company, the merger is critical because “Kroger must expand, adapt and, most importantly, continue to lower prices to compete with global behemoths like Walmart, Costco and Amazon, which have moved aggressively, rapidly and effectively to dominate grocery retailing.”
Kroger maintained that its merger with Albertsons will provide customers nationwide with lower prices and better shopping experiences. “We have detailed plans already. On day one, there will be 28 SKUs that we planned for already that will reduce the prices. Within 90 days, we have 650 items that we have planned we will reduce the prices of those items,” asserted Stuart Aitken, Kroger chief merchant and marketing officer.
As part of its plans, Kroger will dedicate $1 billion dollars in pricing investments, of which more than $100 million will specifically be invested to lower prices in stores across the state of Washington.
“For the company to be successful in 10 years, we believe that we continually need to be more aggressive on pricing and continue to narrow the pricing versus Walmart,” said Rodney McMullen, Kroger chairman and CEO.
Cincinnati-based Kroger serves more than 11 million customers daily through a digital shopping experience and retail food stores under a variety of banner names. The grocer is No. 4 on The PG 100, Progressive Grocer’s 2024 list of the top food and consumables retailers in North America. As of June 15, Albertsons Cos. operated 2,269 retail food and drug stores with 1,725 pharmacies, 403 associated fuel centers, 22 dedicated distribution centers and 19 manufacturing facilities. The Boise, Idaho-based company operates stores under more than 20 banners. Albertsons is No. 9 on The PG 100. Keene, N.H.-based C&S is No. 18 on PG’s list.
