FTC sues to block Kroger-Albertsons $24.6 billion merger
The Federal Trade Commission has sued to block the largest proposed supermarket merger in U.S. history.
The FTC has issued an administrative complaint and authorized a lawsuit in federal court to block the proposed acquisition between The Kroger Company and Albertsons Companies, which was first announced in October 2022 and has been met with increasing regulatory scrutiny. Also, the two unions that represent Kroger and Albertsons employees — the United Food and Commercial Workers International Union and the Teamsters union — have been vocal in their opposition to the deal.
If the merger were completed, Kroger and Albertsons would operate more than 5,000 stores and approximately 4,000 retail pharmacies and would employ nearly 700,000 employees across 48 states.
In a release, the FTC said that the combination of Kroger and Albertsons would result in higher prices for shoppers and lower wages for workers. A bipartisan group of nine attorneys general is joining the FTC’s federal court complaint.
“This supermarket mega merger comes as American consumers have seen the cost of groceries rise steadily over the past few years,” said Henry Liu, director of the FTC’s bureau of competition. “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.”
Liu added that grocery store workers would also suffer under this deal, “facing the threat of their wages dwindling, benefits diminishing, and their working conditions deteriorating.”
Earlier this month, Kroger said that, consistent with its previous approach to mergers, it would lower prices following its merger with Albertsons, investing $500 million to lower prices following the close of the deal — starting day one. It also said it would project union jobs and that no stores would close and no front-line employees would lose their jobs as a result of the merger.
Kroger responded to the FTC ruling with a statement in which it said that contrary to the FTC's statements, blocking its merger with Albertsons will actually harm “the very people the FTC purports to serve: America's consumers and workers.”
“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 stated. “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.”
The grocery giant added that as union membership continues to decline nationwide, especially in the grocery industry, the merger is the best way to secure union jobs, noting has added more than 100,000 good-paying union jobs since 2012.
Last year, in a move to overcome antitrust concerns, Kroger and Albertsons entered into an agreement to sell 413 stores and eight distribution centers across 17 states to C&S Wholesale Grocers, which operates Grand Union grocery stores and Piggly Wiggly stores in the Midwest and Carolinas. But the FTC’s administrative complaint called the divestiture proposal a “hodgepodge of unconnected stores, banners, brands, and other assets that Kroger’s antitrust lawyers have cobbled together and falls far short of mitigating the lost competition between Kroger and Albertsons.”
In its statement, Kroger noted that it and Albertsons Cos. took "considerable" steps to position C&S to continue to successfully operate divested stores as part of its comprehensive plan," including providing C&S with "strong teams, a cohesive network of stores supported by two regional headquarters, beloved banners and private label brands, and a robust operational infrastructure."
As to what's next, Kroger stated: "The merging parties look forward to litigating this action in court so we can deliver the benefits of this merger to communities across America - lower prices, more choices, and more good-paying union jobs for decades to come."