FTC sues to block Kroger, Albertsons merger

The Federal Trade Commission sued Monday to block the merger of grocery giants Kroger and Albertsons, saying the deal would raise grocery prices for millions of Americans and eliminate competition.

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The companies run thousands of stores in nearly every state in the country under names including Fred Meyer, Harris Teeter, Quality Food Center (QFC), Hagen and Safeway. Collectively, the businesses employ more than 700,000 people, most of which are members of the United Food and Commercial Workers union.

“This supermarket mega merger comes as American consumers have seen the cost of groceries rise steadily over the past few years,” Henry Liu, director of the FTC’s Bureau of Competition, said Monday in a statement. “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.”

He added, “Essential grocery store workers would also suffer under this deal, facing the threat of their wages dwindling, benefits diminishing, and their working conditions deteriorating.”

In 2022, Kroger announced plans to acquire Albertsons in a $24.6 billion deal aimed at increasing the company’s footprint and boosting competition with non-union labor companies like Walmart and Costco. It would mark the largest supermarket merger in U.S. history and leave Kroger with 13% of the nation’s grocery market, The Associated Press reported, citing J.P. Morgan analyst Ken Goldman.

Officials with Kroger said Monday that blocking its acquisition of Albertsons would harm consumers and workers alike.

“Kroger has a proven track record of lowering prices so more customers benefit from fresh, affordable food, and our proposed merger with Albertsons will mean even lower prices and more choices for America’s consumers,” the company said.

“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. 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.”

Kroger and Albertsons said the companies will challenge the FTC in court.

The attorneys general of eight states — Arizona, California, Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming — and Washington, D.C., also joined the FTC’s lawsuit. Colorado and Washington earlier sued to block the acquisition.

“This megamerger is bad for workers, for agricultural producers, and for California communities,” California Attorney General Rob Bonta said in a statement. “In some markets in Southern California, Kroger-Albertsons is expected to be the only one-stop grocery option. 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.”

Arizona Attorney General Kris Mayes called the proposed merger “anticompetitive, anti-consumer, and anti-worker” in a statement issued Monday.

“It is clear that Arizonans in rural and urban communities alike are seriously concerned about the potential for drastic changes to their daily lives if this merger goes through,” she said. “Bottom line: this merger will benefit the shareholders of these companies, not regular Arizonans.”

In 2022, Kroger said it expected to complete its merger with Albertsons in early 2024, although the companies have since pushed that timeline back until the first half of Kroger’s 2024 fiscal year. The company said it will invest $500 million to reduce prices and $1.3 billion to enhance the customer experience as part of the acquisition.

Kroger committed to keeping stores open through the merger. Last year, C&S Wholesale Grocers reached an agreement to buy 413 stores, eight distribution centers and two offices that Kroger and Albertsons agreed to divest in markets where they had overlapping stores.

Last year, the United Food and Commercial Workers union voted to oppose the merger.