A top US antitrust watchdog sued to block the country’s largest-ever supermarket merger on Monday, alleging the deal would raise prices for millions of shoppers.
The Federal Trade Commission argued that Kroger’s $24.6bn takeover of rival grocer Albertsons would narrow consumer choice and weaken the quality of products on shelves.
In a lawsuit filed in Oregon, the agency also claimed that thousands of store workers would be harmed. The planned transaction would halt “aggressive competition” for employees, the FTC said, threatening their ability to secure better pay, benefits and working conditions.
Kroger claimed that blocking its purchase of Albertsons risked increasing prices. The companies said they looked forward to making their case in court.
Henry Liu, director of the FTC’s competition bureau, said: “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.”
Kroger and Albertsons each operate across several dozen states; collectively, they would have more than 5,000 stores across 48 states, with a workforce of almost 700,000 people.
The attorneys general of Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming have joined the FTC lawsuit.
While Kroger and Albertsons have offered to divest hundreds of stores to allay regulators’ concerns, the FTC argued that this proposal amounts to a “hodgepodge of unconnected stores, banners, brands, and other assets” that falls “far short” of mitigating the competition lost as a result of their takeover.
Kroger hit back. “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,” the group said in a statement.
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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 claimed.
Albertsons said: “If the Federal Trade Commission is successful in blocking this merger, it would be hurting customers and helping strengthen larger, multi-channel retailers such as Amazon, Walmart and Costco – the very companies the FTC claims to be reining in – by allowing them to continue increasing their growing dominance of the grocery industry.”