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WASHINGTON — Tthe Federal Trade Commission has sued to block a proposed merger between grocery giants Kroger and Albertsons, saying the $24.6 billion deal would eliminate competition and lead to higher prices for millions of Americans.
The FTC filed the lawsuit in U.S. District Court in Oregon on Monday. It was joined in the suit by the attorneys general of eight states and the District of Columbia.
Kroger and Albertsons, two of the nation’s largest grocers, agreed to merge in October 2022. The companies said a merger would help them better compete with Walmart, Amazon, Costco and other big rivals. Together, Kroger and Albertsons would control around 13% of the U.S. grocery market.
Kroger issued a statement saying, “Contrary to the FTC’s statements, blocking Kroger’s merger with Albertsons Companies will actually harm the very people the FTC purports to serve: America’s consumers and workers.
“Kroger’s business model is to take costs out of the business and invest in lowering prices for customers. Kroger has reduced prices every year since 2003, resulting in $5 billion invested to lower prices and a 5% reduction in gross margin over this period. This business model is immediately applied to merger companies. Kroger has a proven track record of lowering prices so more customers benefit from fresh, affordable food, and our proposed merger with Albertsons will mean even lower prices and more choices for America’s consumers.
“The FTC’s decision makes it more likely that America’s consumers will see higher food prices and fewer grocery stores at a time when communities across the country are already facing high inflation and food deserts. In fact, this decision only strengthens larger, non-unionized retailers like Walmart, Costco and Amazon by allowing them to further increase their overwhelming and growing dominance of the grocery industry.”
The statement said that Kroger and Albertsons “look forward to litigating this action in court so we can deliver the benefits of this merger to communities across America — lower prices, more choices, and more good-paying union jobs for decades to come.”
It said that the merger would produce meaningful and measurable benefits for customers, associates and communities across the country,” noting that no stores, distribution centers or manufacturing facilities would close as a result of the merger, including those divested to C&S Wholesale Grocers.
The divestiture plan “builds on the benefits of the merger,” Kroger said, calling C&S “an industry leader in wholesale grocery supply and supply chain solutions, with a strong track record as a successful grocery retailer. Kroger and Albertsons took considerable steps to position C&S to successfully operate divested stores, the statement said, including providing it with strong teams, a cohesive network of stores supported by two regional headquarters, beloved banners and private label brands, and a robust operational infrastructure.
“In addition to ensuring no store closures as a result of the merger, the divestiture plan will extend a competitor to new geographies and will maintain all current collective bargaining agreements, which include industry-leading healthcare and pension benefits, bargained-for wages, and ensuring frontline associates remain employed,” the statement added.
