US regulator sues to block $24.6 bn Kroger supermarket deal

Issued on: 26/02/2024 - 19:13

1 min

Arguing the deal would lead to "higher prices for groceries and other essential household items for millions of Americans," the Federal Trade Commission announced that it would seek a preliminary injunction blocking the transaction in federal court.

"This supermarket mega merger comes as American consumers have seen the cost of groceries rise steadily over the past few years," said Henry Liu, director of the FTC's competition bureau.

"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."

The companies announced the deal in October 2022, touting the union as a way to take advantage of economies of scale to compete more effectively with giants like Walmart and Amazon.

Kroger rejected the FTC's arguments, saying the company had a long history of reducing prices for consumers after acquisitions.

The company has committed to $500 million to lower prices after the merger closes, plus another $1.3 billion to upgrade Albertsons stores.

"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," said Kroger, which along with Albertsons looks "forward to litigating this action in court."

Kroger also said the FTC's action would harm workers by boosting "larger, non-unionized retailers like Walmart, Costco and Amazon by allowing them to further increase their overwhelming and growing dominance of the grocery industry."

Regulators argue the opposite is true, with workers today benefiting from competition for labor, which boosts their wages.

"A combined Kroger/Albertsons... would gain increased leverage over workers and their unions -- to the detriment of workers," the FTC said.

The FTC described Kroger and Albertsons as direct competitors, adding that their suggested divestitures of hundreds of stores to C&S Wholesale Grocers to help offset the merger was an inadequate solution that would lead to a "hodgepodge" of assets that couldn't adequately compete against the enlarged Kroger.

The FTC action was joined by the District of Columbia and eight states, including California, Illinois and Arizona.

Shares of Kroger fell 1.0 percent after midday, while Albertsons gained 1.5 percent.

© 2024 AFP