FTC Sues to Block $25 Billion Grocery Merger Between Kroger, Albertsons

The Federal Trade Commission has officially sued to block a potential mega-merger between two major discount grocers estimated to be worth $25 billion.

The proposed deal between grocery chains Albertsons and Kroger was initially announced in October 2022, but on Monday, the FTC argued that the deal would incur major job losses across both chains. It also claimed the deal would diminish the ability of workers to fight for competitive wages, increase prices, and lead to "lower quality" products.

"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," said Henry Liu, director of the FTC's Bureau of Competition in a statement. "Essential grocery store workers would also suffer under this deal, facing the threat of their wages dwindling, benefits diminishing, and their working conditions deteriorating."

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Both Kroger and Albertsons hold an array of different smaller grocers under their umbrella, including Harris Teeter, Fry's, Pavillions, Safeway, and Vons. Should the merger complete, the newly combined company would employ roughly 700,000 employees across 48 U.S. states while operating over 5,000 grocery stores.

The FTC also noted in its lawsuit that both Kroger and Albertsons are two of the largest employers of union workers in the industry, and if the two merge, it would decrease competition for better union conditions.

However, in a statement following the lawsuit, Kroger claimed that blocking the merger would only strengthen grocers with non-unionized workers and allow them to continue dominating the industry.

"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 said. "In fact, this decision only strengthens larger, non-unionized retailers like Walmart, Costco, and Amazon by allowing them to further increase their overwhelming and growing dominance of the grocery industry."

Kroger also said that there would be no planned store closures as a result of the merger.

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According to the most recent data from the U.S. Department of Agriculture, food prices in the U.S. increased 5.8% in 2023.

Upon news of the lawsuit, Kroger was up over 1.8% in a five-day period. Albertson's was down over 2.5% in the same period.