Kroger and Albertsons get their day in merger court as food prices take the stand
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If it pleases the cart… Nearly two years after announcing their $25B supermarket mega-merger, this week Kroger and Albertsons head to court with regulators over the deal. Combining America’s second- and fourth-largest food sellers would create a $200B grocery goliath with 5K US stores and 720K employees. In February, the FTC sued to block the deal, which it said could hurt competition and lead to higher grocery prices. Kroger and Albertsons say they must combine to compete with Walmart, Costco, and Amazon.
Right back at ya: Last week Kroger sued the FTC in a move that antitrust experts called a stunt. The grocer argues that the agency's challenge is unconstitutional.
Double-bagged: Because many Kroger and Albertsons stores are close to one another, regulators fear a merger could create localized monopolies and suppress wages.
Supermarket heap: To appease regulators, Kroger and Albertsons agreed to sell ~580 stores to C&S Wholesale Grocers. The FTC says C&S, which owns 23 US supermarkets, can’t handle a deal that would make it the size of Trader Joe’s.
Price check on everything… The portion of Americans’ income spent on food is at a 30-year high, with prices up ~21% since July 2020. The White House said that major grocery chains have been enjoying their highest profit margins in two decades. This month, VP Kamala Harris proposed a federal ban on grocery price gouging. But as consumers balk at checkout, national retailers like Walmart and Target have cut prices to reel ’em back in.
Lower prices are a winning argument… that’s why everyone’s making it. With food costs at the top of many Americans’ concerns, both sides of the grocery-merger hearing are pitching their victory as a way to keep bills manageable. While regulators say that the merger risks further inflating food costs, Kroger and Albertsons said they’ll spend $1B on cutting prices if the deal’s approved.