Kroger-Albertsons Merger Raises Concern

Kroger and Albertsons Apps on Phone | Image by Shutterstock

A proposed merger between retail giants Kroger Co. and Albertsons Cos. Inc. has sparked scrutiny by congressional leaders over the potential for anticompetitive behavior.

The Senate Judiciary Committee’s Antitrust panel recently questioned the heads of Kroger and Albertsons about whether a union between the two could result in potential price abuses.

“Won’t Kroger feel less competitive pressure to keep prices low?” asked Sen. Amy Klobuchar (D-MN).

This is the question at the heart of the proposed $25 billion merger, which was announced in mid-October, as The Dallas Express previously reported.

The proposed merger would combine the first and second largest supermarket chains in the U.S. and would allow the new company to operate 4,998 stores across 48 states, 66 distribution centers, 52 manufacturing plants, 3,972 pharmacies, and 2,015 fuel centers, according to a news statement about the merger.

Despite the trepidation around price increases, executives for Kroger and Albertsons believe the deal would allow shoppers to save money in addition to allowing the newly combined supermarket to keep up with competitors like Amazon and Walmart.

“Our commitments are to lower prices starting Day 1, continue investing in our associates and stores, and doing more in our communities than either of us can do alone,” said Kroger CEO Rodney McMullen.

“The best way to compete with mega stores like Walmart and highly capitalized online companies like Amazon will be through a merger with Kroger,” said Albertsons CEO Vivek Sankaran.

However, in a business environment where major corporations vie for greater market dominance, congressional leaders and experts must meticulously examine the deal’s potential to harm retail consumers.

Industry professionals and groups like the National Grocer’s Association have noted worries about the level of price control the new grocer would be able to wield over shoppers and the negative impact the deal could have on smaller mom-and-pop stores.

“I am concerned that if guardrails are not in place, long-term competition and … consumers could be harmed,” said Michael Needler, the president of Fresh Encounter Inc. “With the merger of Kroger and Albertsons, what we fear is the creation of another power buyer like Walmart where the combined firm gains [significantly] more leverage with suppliers.”

“Kroger and Albertsons claim that this merger will benefit consumers — we are not convinced,” said Sumit Sharma with Consumer Reports. Sharma claimed that the merger would eliminate significant competition.

Kroger lists Albertsons as its main competitor in five out of its top 10 markets that cover 546 of the Ohio-based chain’s stores, he said.

Sen. Mike Lee (R-UT) questioned the timing of the proposed merger, suggesting that current macroeconomic conditions have made consumers more vulnerable to price abuses.

“Sadly, consumers have to choose between buying groceries and putting gas in their cars,” said Lee.

Both grocery store chains believe they have a “clear path” toward regulatory approval. A deal is expected to close sometime in 2024.

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