Albertsons and Kroger supermarkets
Bridget Bennett Bloomberg | Getty Images; Brandon Bell | Getty Images
The Federal Trade Commission announced Monday that it is filing a lawsuit seeking to block the merger of the two companies. kroger and albertsonssaid the merger of two large grocery stores would result in higher prices for shoppers and lower wages for workers.
The FTC announced in a release that it has filed an administrative complaint and authorized litigation in federal court to block Kroger’s $24.6 billion acquisition of Albertsons, creating one of the nation’s largest grocery stores. did. A bipartisan group of nine attorneys general from Arizona, California, Washington, D.C., Illinois, Maryland, Nevada, New Mexico, Oregon, and Wyoming joined in the legal complaint.
“Kroger’s acquisition of Albertsons will lead to further increases in the price of everyday groceries, exacerbating the economic strain currently facing consumers across the country,” said Henry Liu, director of the FTC’s Bureau of Competition. said. “Essential grocery store workers will also suffer under this agreement, facing the threat of lower wages, fewer benefits, and worse working conditions.”
Kroger said in a statement that blocking the deal would “actually harm the very people the FTC claims to serve: American consumers and workers.”
“The FTC’s decision means American consumers could experience higher food prices and fewer grocery stores at a time when communities across the country are already facing high inflation and food deserts,” the company said in a statement. It has increased,” he said.
Albertsons said in a statement that federal regulators are ignoring the growing control of major retailers, including: walmart, Amazon and costcoand said this move would strengthen them.
“We are disappointed that the FTC continues to hold the same outdated view of the U.S. grocery industry as it did 20 years ago, and we look forward to presenting our case in court.” mentioned in.
The Kroger-Albertsons deal has been stuck in a holding pattern for more than a year while federal and state regulators scrutinized the merger. The two companies announced a proposed agreement in October 2022, saying the partnership would allow grocers to better compete with larger retailers.
The FTC argued that supermarket mergers would harm shoppers and workers at a time when food and many household goods are rising in price. The Biden administration has been skeptical of various mergers, and the White House has made consumer protection a priority as President Joe Biden seeks re-election this fall.
Kroger CEO Rodney McMullen argued for the partnership, saying that combining the two major supermarket operators would lower prices, increase profitability and accelerate innovation in the grocery industry. The company also pledged $500 million to lower prices for customers and $1 billion to raise wages and expand benefits for employees.
But after a period of historic inflation, the deal faces fierce resistance and new complications. Two unions representing Kroger and Albertsons employees, the Food and Commercial Workers International Union and the Teamsters Union, opposed the deal.
Rising prices for everyday goods have raised concerns that big companies have too much pricing power, and some politicians have expressed similar concerns.
Rising food prices are frustrating consumers and are the subject of campaigns. Earlier this month, grocery chains drew the ire of Mr. Biden by accusing companies of ripping off shoppers while keeping profit margins high.
Together, Kroger and Albertsons would become a giant company, narrowing the market share gap with Walmart, the nation’s largest grocer. Kroger and Albertsons also compete with regional companies such as Publix and Wegmans, as well as discounters such as Aldi and Trader Joe’s.
The partnership will bring together about two dozen supermarket banners, including Kroger’s namesake stores, Fred Meyer and Ralphs, and Albertsons-owned grocery chains, including Safeway, Acme and Tom Thumb.
To overcome antitrust concerns, Kroger last year planned to sell more than 400 stores to Piggly Wiggly owner C&S Wholesale Grocers, along with assets such as distribution centers and some private brands. announced.
But the FTC’s complaint says the proposed sale alone is not enough. Federal regulators said in a release Monday that it would create a “miscellaneous collection of unconnected stores, banners, brands and other assets” that would not be a true rival to the Kroger-Albertsons merger.
The FTC argued that the Kroger-Albertsons merger would undermine the rationale for improving the customer experience. The federal agency said competition among supermarkets is contributing to fresher produce, better private label products and services that shoppers love, such as flexible pharmacy hours and curbside pickup.
The FTC also argued that the agreement reduces workers’ bargaining power because they are less likely to be employed by the grocery store. In some markets, like Denver, the integrated supermarket operator will be the sole employer for unionized grocery store workers, officials said.
Some news outlets reported last week that the FTC would soon file a lawsuit to block the merger, but a Kroger spokesperson said the company is still in talks with the FTC and state regulators.
The company reiterated its claim that the merger would benefit grocery shoppers and employees.
In a statement last week, the company said: “Blocking the merger will only embolden large non-union retailers like Walmart, Amazon and Costco to continue to oppose unions and leave their communities. ” he said. “Kroger will continue to lower prices, expand high-wage union jobs, and increase access to fresh food to families who need it most.”
Kroger stock was trading about 1.7% lower Monday afternoon, while Albertsons stock was up slightly.
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