The largest proposed supermarket merger in U.S. history, Kroger’s $24.6 billion purchase of Albertsons, would mean higher prices for food shoppers and less competition, said the Federal Trade Commission on Monday. The FTC said it would file suit in federal court in Oregon to block the merger as anticompetitive.
If carried out, the merger would result in one company that operates 5,000 stores and 4,000 pharmacies with nearly 700,000 workers in 48 states, said the FTC. Eight states and the District of Columbia are joining the FTC lawsuit. Colorado and Washington state have filed suit separately against the merger, which was announced in October 2022.
“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 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.”
Kroger said it and Albertsons “look forward to litigating this action in court” and said the merger would mean “lower prices, more choices, and more good-paying union jobs for decades to come.”
Although Kroger and Albertsons are among the largest U.S. supermarket chains — one analytics firm says they are the leaders in retail sales volume — Walmart is the largest food retailer and Costco is in the top tier. FTC opposition “only strengthens larger, non-unionized retailers like Walmart, Costco, and Amazon by allow them to further increase their overwhelming and growing dominance of the grocery industry,” said Kroger.
FTC commissioners voted 3-0 to file an administrative complaint against the merger and to authorize its staff to seek a temporary restraining order and a preliminary injunction in court to block it. An administrative complaint is the first step of a process that will lead to a formal hearing before an administrative law judge.
Kroger and Albertsons are direct competitors so it is inevitable that a merger would mean less competition for customers and less reason to innovate, said the FTC. The combined companies would have more leverage against workers to hold down wages and working conditions. In some place, such as Denver, Kroger and Albertsons are the only employer of unionized grocery workers, it said.
The FTC scoffed at a proposal by Kroger and Albertsons to divest several hundred stores and other assets to C&S Wholesale Grocers, “which today operates just 23 supermarkets and a single retail pharmacy.” The administrative complaint said C&S was unlikely to be a successful competitor. “C&S Wholesale Grocers is an industry leader in wholesale grocery supply and supply chain solutions, with a strong track record as a successful grocery leader,” said Kroger.
Kroger, with headquarters in Cincinnati, has stores in 36 states under its own name and under banners such as Harris Teeter, King Soopers, and Fred Meyer. Albertsons, headquartered in Boise, Idaho, has stores in 35 states under regional names such as Safeway, Vons, and Jewel-Osco as well as Albertsons.
The consumer group Center for Science in the Public Interest applauded the FTC decision to oppose the merger, which it said would result in fewer grocery stores and higher food prices. The buying power of large food retailers means “less bargaining power for smaller food companies and farmers and fewer choices for consumers.”