Supermarket Merger Fails to Check Out with FTC

The Federal Trade Commission (FTC) has halted the proposed merger of Kroger and Albertsons, which would have created one of the largest grocers in the US with around 5,000 stores across the country.

Why? Well, the FTC is concerned that the deal could lead to higher prices for shoppers and lower wages for workers, thereby harming consumers and workers. The FTC has filed an administrative complaint and authorized a lawsuit in federal court to block the acquisition, arguing that the proposed divestiture of over 400 stores to Piggly Wiggly owner C&S Wholesale Grocers, along with other assets like distribution centers and some private brands, is insufficient to address antitrust concerns.

The FTC further contends that the divestiture would create "a hodgepodge of unconnected stores, banners, brands, and other assets" that would not be a true rival to the combined Kroger and Albertsons.

The proposed merger has faced resistance from two unions that represent Kroger and Albertsons employees, the United Food and Commercial Workers International Union and the Teamsters union, who have expressed concerns about the potential impact on workers' wages and bargaining power. Additionally, a bipartisan group of attorneys general from Arizona, California, Washington D.C., Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming has joined the court complaint.

Kroger and Albertsons hoped that the deal would help them compete better with larger retailers, reduce prices for customers, boost profitability and speed up innovation in the grocery industry. In fact, Albertsons said in a statement that federal regulators are disregarding the growing dominance of larger retailers like Walmart, Amazon and Costco and said the move will strengthen them. However, the Biden administration has been skeptical of a range of mergers and has emphasized consumer protection as a key issue in the upcoming election. The FTC's priority is consumer protection, and they've been scrutinizing the deal for over a year.

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