FTC Sues to Block Kroger, Albertsons Supermarket Merger

The Federal Trade Commission is suing in federal court to block the proposed $25B merger of supermarket giants Kroger and Albertsons.

In a release announcing its administrative complaint and authorizing the federal lawsuit, the FTC said that the combination of Kroger and Albertsons would result in higher prices for consumers and lower wages for store workers.

“This supermarket mega merger comes as American consumers have seen the cost of groceries rise steadily over the past few years. Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today,” said Henry Liu, director of the FTC’s bureau of competition, in a statement.

Liu added that grocery store workers at the combined chains would be “facing the threat of their wages dwindling, benefits diminishing, and their working conditions deteriorating.”

Kroger fired back, saying the FTC’s action to block the merger will harm the people the regulator purports to protect-consumers and workers.

“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,” Kroger said, in a statement.

Kroger said the FTC’s ruling would be detrimental to store workers. “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 company said.

A bipartisan group of nine state attorneys general is joining the FTC’s federal court complaint, according to a report in Chain Store Age. Two unions that represent Kroger and Albertson employees, the United Food and Commercial Workers International Union and the Teamsters, also oppose the merger.

Under a deal announced in October 2022, the combination of Kroger and Albertsons would operate more than 5,000 stores and about 4,000 retail pharmacies, employing a total of about 700K workers in 48 states.

Earlier this month, Kroger pledged to invest $500M to lower prices following a close of the merger with Albertsons. Kroger said it would protect union jobs and that no stores will close or front-line employees would lose their jobs as a result of the merger.

The company also pledged to invest an incremental $1B to raise wages and comprehensive benefits for all associates post-close, CSA reported.

Last year, in a move to pre-empt antitrust concerns about the merger, Kroger and Albertsons entered into an agreement to sell 413 stores and eight distribution centers in 17 states to C&S Wholesale Grocers, which operates Grand Union and Piggly Wiggly supermarkets.

The FTC’s administrative complaint calls the divestiture proposal “a hodgepodge of unconnected stores, banners, brands and other assets” that “falls far short of mitigating the lost competition between Kroger and Albertsons.”