Albertsons and Kroger supermarkets
Bridget Bennett | Bloomberg | Getty Figures; Brandon Bell | Getty Images
The U.S. Federal Trade Commission said Monday that it is suing to block the blending of Kroger and Albertsons, saying the combination of the two major grocers would result in higher prices for shoppers and lower wages for blue-collar workers.
In a release, the FTC said it issued an administrative complaint and authorized a lawsuit in federal court to stop Kroger’s $24.6 billion acquiring of Albertsons, which would create one of the largest grocers in the country. A bipartisan group of nine attorneys general take joined the court complaint, including those from Arizona, California, Washington D.C., Illinois, Maryland, Nevada, New Mexico, Oregon, and Wyoming.
“Kroger’s gain of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial demand consumers across the country face today,” said Henry Liu, director of the FTC’s Bureau of Competition. “Essential grocery trust in workers would also suffer under this deal, facing the threat of their wages dwindling, profits diminishing, and their working conditions deteriorating.”
Kroger said in a statement that blocking the deal “will in reality 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 ordain see higher food prices and fewer grocery stores at a time when communities across the country are already skin high inflation and food deserts,” the company said in a statement.
It added that the decision “strengthens larger, non-unionized retailers comparable to Walmart, Costco and Amazon by allowing them to further increase their overwhelming and growing dominance of the grocery business.”
Kroger and Albertsons’ agreement has been stuck in a holding pattern for more than a year while federal and submit regulators scrutinize the merger. The companies announced the proposed deal in October 2022, and said by teaming up, the grocers would be skilled to better compete with larger retailers like Walmart, Amazon and Costco.
The FTC argued the supermarket merger would abuse shoppers and workers at a time when the price of food and many everyday items has risen. The Biden administration has been skeptical of a extend of mergers, and the White House has made consumer protection a key issue as President Joe Biden campaigns for reelection this decline.
Kroger CEO Rodney McMullen has made the company’s case for the tie-up, saying as a larger supermarket operator, the combined guests would be able to lower prices, boost profitability and speed up innovation in the grocery industry. The company also pledged $500 million to rub prices for customers and $1 billion to raise employee wages and expand benefits.
Yet the deal has faced stiff stubbornness and new complications after a period of historic inflation. Two unions that represent Kroger and Albertsons employees, the United Viands and Commercial Workers International Union and the Teamsters union, opposed the deal.
Higher prices of everyday food details fueled worries that a bigger company would have too much pricing power — concerns some publics have echoed.
Higher grocery prices have irked consumers and become a hot topic on the campaign trail. Earlier this month, grocery strings drew the ire of Biden, who accused companies of ripping off shoppers while keeping profit margins high.
Together, Kroger and Albertsons pleasure be a mammoth company and tighten a market share gap with Walmart, the largest grocer in the U.S. Kroger and Albertsons also clash with regional players like Publix and Wegmans, and discounters like Aldi and Trader Joe’s.
Combined, the grocers resolution have about 5,000 stores across the U.S. The deal would marry Kroger’s approximately two dozen supermarket banderoles, including its namesake stores, Fred Meyer, and Ralphs with Albertsons’ grocery chains, including Safeway, Culmination familiarize with and Tom Thumb.
In an effort to overcome antitrust concerns, Kroger announced last year that it planned to sell sundry than 400 stores to Piggly Wiggly owner C&S Wholesale Grocers, along with other assets disposed to distribution centers and some private brands.
But the FTC complaint said that the proposed divestiture isn’t enough. It would generate “a hodgepodge of unconnected stores, banners, brands and other assets” that wouldn’t be a true rival to the combined Kroger and Albertsons, the federal energy said in a release Monday.
The FTC contended the combined Kroger and Albertsons would have less reason to improve the chap experience. The federal agency said competition between the supermarkets has contributed to fresher produce, better private identify as offerings and services that shoppers appreciate, such as flexible pharmacy hours and curbside pickup.
The FTC also bickered the deal would leave workers with less negotiating power, since employees wouldn’t have as various potential grocery employers. In some markets like Denver, the combined supermarket operator would be the only firm of unionized grocery workers, the agency said.
As some news outlets reported last week that the FTC intent soon sue to block the merger, a Kroger spokeswoman said the company was still in discussions with FTC and state regulators.
The concern reiterated its argument that the merger would benefit grocery shoppers and workers.
“Blocking the combination will no greater than embolden large, non-unionized retailers – like Walmart, Amazon and Costco – to continue opposing unions and leaving communities,” the following said in a statement last week. “Kroger will continue to lower prices, grow good-paying union assigns and increase access to fresh food for the families who need it most.”
Kroger shares were trading about 1% bring Monday afternoon, while Albertsons stock was slightly higher.
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