The Federal Trade Commission (FTC) has filed a lawsuit to block the proposed merger between grocery giants Kroger and Albertsons, stating that the $24.6 billion deal would eliminate competition and result in higher prices for consumers.
The FTC filed an administrative complaint against the companies, which will be considered by an administrative law judge. Additionally, a lawsuit was filed in the U.S. District Court in Oregon, with the attorneys general of eight states, including California, and the District of Columbia joining.
The backstory: Kroger and Albertsons initiated the merger plan in October 2022 to enhance their competitiveness against major rivals such as Walmart, Amazon, and Costco. The merged entity would control around 13% of the U.S. grocery market.
The big picture: The FTC contended that the proposed merger would eliminate competition for workers, jeopardizing their ability to secure higher wages, better benefits, and improved working conditions.
- Both Kroger and Albertsons announced their intention to challenge the FTC’s decision in court.
What they’re saying: “Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today,” said Henry Liu, director of the FTC’s Bureau of Competition. “Essential grocery store workers would also suffer under this deal, facing the threat of their wages dwindling, benefits diminishing, and their working conditions deteriorating.”
- California Attorney General Rob Bonta said the “megamerger” would be bad for workers, agricultural producers and California communities.
- “Today, we are going to bat for a more just and competitive economy, one where companies need to compete for labor and where prices and service matter,” Bonta said. “This merger will leave Californians with limited choices over where to shop – and for workers in this industry, where to work. As many families continue to feel the burden of inflation, fighting corporate consolidation that threatens to increase prices and reduce service is more important than ever.”
The other side: Kroger said in a statement that the FTC’s action will hurt America’s workers and consumers.
- Kroger cited its business model of investing in lower prices, saying it has reduced prices annually since 2003 – a $5 billion investment and a five percent reduction in gross margin. That business model would be immediately applied to the merged company.
- “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,” Kroger said. “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.”
