FTC Wants to Play Spoiler at Planned Kroger Albertsons Merger

The ongoing battle between the Federal Trade Commission (FTC) and Kroger has captured the attention of consumers and industry insiders alike. At the center of this high-stakes drama is a proposed $25 billion Kroger Albertsons merger, a move that could reshape the U.S. grocery industry for years to come.

Kroger and Albertsons have long histories in the American grocery industry. Kroger was founded in 1883 in Cincinnati, Ohio, and has grown to become one of the largest grocery chains in the U.S., with over 2,700 stores. Albertsons was founded in 1939 in Boise, Idaho, and has expanded through a series of acquisitions, including the purchase of Safeway in 2015. Both companies have played significant roles in shaping the grocery industry as we know it today​.

Is the Kroger Albertsons Merger Good for Consumers or For the Companies?

One of the most significant debates surrounding this merger is its potential impact on grocery prices. Kroger argues that the merger will lead to lower prices by allowing the combined entity to negotiate better deals with suppliers and streamline operations. They have promised to invest $1 billion in lowering grocery prices post-merger, which they believe will directly benefit consumers​.
On the flip side, the FTC and several state attorneys general argue that reducing competition by merging two of the largest grocery chains in the country will lead to higher prices, not lower. They point to historical examples where similar mergers have resulted in price increases rather than decreases. The FTC's concern is that without sufficient competition, Kroger and Albertsons will have less incentive to keep prices low​.

The FTC’s Antitrust Concerns on the Kroger Albertsons Merger

The FTC’s challenge to this merger is rooted in concerns about market consolidation. By eliminating one of the major competitors in the grocery space, the merger could create a near-monopoly, giving Kroger too much control over pricing. The FTC is also concerned about the impact on unionized workers. The merger could weaken union power, leading to lower wages and fewer jobs. This concern is especially relevant given the importance of grocery store workers during the COVID-19 pandemic and the ongoing efforts to improve working conditions in the industry​.

FTC Chief Trial Counsel Susan Musser argued in court that allowing Kroger to “swallow” Albertsons would reduce competition, ultimately leading to higher prices and lower quality for consumers. Musser also emphasized that the merger would undermine the bargaining power of unionized grocery workers, reducing their ability to secure better wages and benefits through strikes.

But What’s in It for Kroger and Albertsons?

For Kroger, this merger represents a strategic move to compete with larger rivals like Walmart and Amazon. By acquiring Albertsons, Kroger hopes to gain more market share and improve its bargaining power with suppliers. The company also sees an opportunity to enhance its loyalty programs and digital marketing efforts, potentially increasing customer retention and driving future sales​.

For Albertsons, the merger could be a much-needed lifeline. The company has faced financial difficulties in recent years, and the merger could provide the stability it needs to continue operating. If the merger is blocked, Albertsons may need to explore other options, such as selling the company to another buyer or closing stores to cut costs​.

Not Until the FTC Says So

As the trial continues, the outcome will have far-reaching implications for consumers, workers, and the grocery industry as a whole. Whether the merger is approved or blocked, it will likely set a precedent for future mergers and acquisitions in the industry. Consumers and industry experts alike will be watching closely to see how this case unfolds.

Do you agree that the planned Kroger Albertsons merger can bring lower prices for consumers and better jobs for workers? Or, do you support the FTC’s stand that this move is worthy of an antitrust suit? Tell us what you think.