KROGER IN COURT: Closing Arguments in Lawsuit to Block Biggest Supermarket Merger
The Kroger Co. and Albertsons Cos. concluded their Federal Trade Commission’s (FTC) case on Sept. 17 in a Portland, Ore., courtroom with closing statements.
FTC is trying to block Kroger's $24.6 billion merger with Albertsons, alleging that the deal would eliminate competition and raise grocery prices.
From Kroger's perspective, it 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.
According to the national grocer, it entered into the agreement to merge with Albertsons to keep pace with an expanding set of competitors (mass merchants, dollar stores, club stores); extend its geographic reach; increase its operating efficiency; and lower its costs.
The two companies are also quick to point out that without the merger, Albertsons would be the one that suffers, leaving it unable to compete. Albertsons would be forced to change its cost structure to operate on its own in the longer term, which could include layoffs, closures, a market exit or a sale to another competitor. Kroger and Albertsons said that their merger would address all of those concerns.
[RELATED: Loyalty Up at Albertsons, But Profits Down]
In fact, Kroger is making several commitments to ensure the success of the Albertsons deal. The company said that it will help ensure that no stores close as a result of the merger, that all front-line associates remain employed, that all collective-bargaining agreements continue, and that employees continue to receive health care and pension benefits.
But some grocery store workers are doubtful of the claims being made. In response to the FTC trial wrapping up, UFCW Locals Stop the Merger Coalition released the following statement: “The evidence that came out in the federal trial clarified what we already knew – this proposed mega-merger would harm workers and shoppers, and we cannot trust anything the CEOs of Kroger and Albertsons say unless it is legally binding. The corporations admitted under oath, despite repeated comments to the public and media to the contrary, that some stores may close after a merger, prices may not actually go down after a merger, and claims they have made to protect union jobs are not legally enforceable.”
The Stop the Merger coalition is led by UFCW Locals 7, 324, 400, 770, 1564, and 3000. Combined, these six locals represent over 100,000 Kroger and Albertsons workers in a dozen states across the country.
While closing arguments were heard in Oregon, another trial in Washington state to block the Kroger-Albertsons merger resumed.
Washington State Attorney General Bob Ferguson filed a lawsuit on Jan. 15 in King County Superior Court, also concerned that the multibillion-dollar deal would raise prices.
[RELATED: Washington State Wants to Avoid Another Haggen Fiasco]
But Kroger says it is aware that if it raises prices, it would drive customers away. The retailer reiterated that the merger will help the combined company compete effectively and offer customers the lowest possible prices.
The biggest food seller in the United States isn’t a “traditional supermarket;” it's Walmart. According to Kroger, Walmart is singularly focused on being the national leader in price, and Kroger is singularly focused on closing the gap with Walmart on pricing. Through the merger, Kroger said that it will drive down pricing at Albertsons so those stores can better compete with Walmart. (Albertsons is currently priced relatively high compared with competitors.)
Day three of the Washington state trial resumes on Sept. 18
The state of Colorado has also sued to block the merger.
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.
