The proposed $24.6 billion merger between Kroger Co. and Albertsons Companies, Inc. is currently facing legal opposition from the Federal Trade Commission (FTC) as well as a coalition of nine attorneys general, who argue that the deal could result in reduced competition and increased prices.
This merger, if completed, would be the largest in the history of American supermarkets, but detractors, including the FTC, argue it would eliminate competition, increase grocery prices, and have detrimental effects on thousands of workers. The attorneys general supporting this stance hail from Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon, and Wyoming.
Colorado and Washington have already separately filed lawsuits against the merger, out of concerns about potential harm to consumers. Kroger and Albertsons currently operate in a combined 36 states, with thousands of stores and close to 700,000 employees. Following the merger, these figures would increase.
The FTC argues that the merger, first proposed in 2022, would result in higher prices and lower quality of goods and services, while also reducing choice for consumers. Additionally, it would undermine competition for employers, potentially resulting in lower wages and benefits for workers.
Statements from executives from both companies acknowledge the competitive nature of the relationship between Kroger and Albertsons, particularly in terms of both prices and employee benefits. Some even view the merger as a move towards a monopoly in the grocery sector.
To try to receive antitrust approval for the merger, Kroger and Albertsons proposed divesting several hundred stores and other assets to C&S Wholesale Grocers. However, the FTC criticizes this proposal as lacking coherence and failing to address the competitive issues raised by the merger. The FTC contends that C&S would face significant challenges integrating these various components into a functional business.
Henry Liu, Director of the FTC's Bureau of Competition, views the merger as a dangerous development given the steady rise of grocery prices over the past few years. He warns that further price hikes could result from this merger, worsening the financial strain for many American consumers.
This case is expected to be heard in the U.S. District Court for the District of Oregon, where the FTC and state attorneys general will jointly file their complaint and request for preliminary relief.
