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The Federal Trade Commission has sued to block Kroger’s acquisition of Albertsons, threatening the largest supermarket merger in US history in the latest sign of Washington’s crackdown on anti-competitive conduct.
The FTC on Monday challenged the $24.6bn acquisition, alleging that it would eliminate competition between the two companies, increase prices for groceries and harm product quality and consumer choice. The deal would also dent competition for workers and hamper their ability to obtain higher wages, according to the complaint, which was joined by a bipartisan group of nine attorneys-general from regions including California and Wyoming.
The merged entity would operate more than 5,000 stores and approximately 4,000 retail pharmacies while employing nearly 700,000 staff across 48 states, the FTC said.
A Kroger spokesperson said that blocking the deal would “harm the very people the FTC purports to serve: America’s consumers and workers”. Their combination would instead increase competition, lower prices and improve wages, the companies said, pledging to challenge the move in court.
“We are disappointed that the FTC continues to use the same outdated view of the US grocery industry it used 20 years ago,” an Albertsons spokesperson said.
The commission’s intervention comes against the backdrop of the White House grappling to bring down living costs as President Joe Biden seeks re-election this year. While inflation is now falling worldwide after interest rate rises, Biden has contended with higher prices souring Americans’ view of the economy for much of his presidency.
“This supermarket megamerger comes as American consumers have seen the cost of groceries rise steadily over the past few years,” noted Henry Liu, director of the FTC’s bureau of competition. The deal “would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today”, he said.
Biden has also sought to crack down on anti-competitive conduct in business through the appointment of progressive officials in senior roles, including FTC chair Lina Khan. This new generation of “trust busters” lament excessively lax antitrust policy in recent decades that they say has harmed competition across the US economy.
The FTC’s move reflects some of the themes in its tougher antitrust stance, including finding the companies’ proposal to divest several hundred stores and other assets “inadequate”. These comprised a “hodgepodge of unconnected” assets that would be difficult to turn into a “successful competitor,” the commission said.
The agency also focused on the allegedly harmful effects the deal would have on labour, saying that the combined entity “would gain increased leverage over workers and their unions”. In some places, such as Denver, the merged business would be the sole employer of unionised grocery workers, the FTC said.
Earlier this year, the states of Colorado and Washington had also sued to block the transaction, a move the companies are set to challenge in court.
