FTC Sues to Block Massive Grocery Merger

The Federal Trade Commission sued to block a proposed merger between grocery giants Kroger and Albertsons, reports the AP, saying the $24.6 billion deal would eliminate competition and lead to higher prices for millions of Americans. The FTC filed a lawsuit in US District Court in Oregon on Monday. It was joined in the suit by the attorneys general of eight states and the District of Columbia.

• Background: 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 US grocery market; Walmart controls 22%, according to JPMorgan analyst Ken Goldman.

• Kroger, based in Cincinnati, Ohio, operates 2,750 stores in 35 states and the District of Columbia, including brands like Ralphs, Smith's, and Harris Teeter.
• Albertsons, based in Boise, Idaho, operates 2,273 stores in 34 states, including brands like Safeway, Jewel Osco, and Shaw's. Together the companies employ around 700,000 people.
• Inflation worries: The merger, announced at a time of high food-price inflation, was bound to get tough regulatory scrutiny. US prices for food eaten at home typically rise 2.5% per year, but in 2022 they rose 11.4% and in 2023 they rose another 5%, according to government data. Inflation is cooling, but gradually. "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, the director of the FTC's Bureau of Competition.

• Promises: Kroger has promised to invest $500 million to lower prices as soon as the deal closes. It said it also invested in price reductions when it merged with Harris Teeter in 2014 and Roundy's in 2016. Kroger also promised to invest $1.3 billion in store improvements at Albertsons as part of the deal. But the FTC, which said the proposed deal would be the largest grocery merger in US history, said it would also erase competition for workers, threatening their ability to win higher wages, better benefits, and improved working conditions.

(More Kroger stories.)