(The Center Square) – The Federal Trade Commission has sued to prevent the $24.6 billion merger between Kroger and Albertsons, claiming it would constitute a grocery monopoly.
If allowed to proceed, the merger would result in the sale of 104 Washington-based stores (413 nationally) to C&S Wholesale Grocers. Although that plan is intended to dispel arguments that the merger would create a monopoly, the gesture has failed to satisfy various government entities, including the Washington State Attorney General’s Office, which filed a lawsuit last month. However, the Washington AGO is not among the nine attorneys general included in the FTC’s lawsuit.
While Kroger argues that the corporate merger would lead to reduced prices, “The FTC charges that the deal would eliminate head-to-head price and quality competition, which have driven both supermarkets to lower their prices and improve their product and service offerings,” an FTC statement reads. “If the merger takes place, grocery prices will increase, and Kroger and Albertsons’ incentive to improve product quality and customer service will decrease, further harming customers.”
Kroger has argued that the deal is necessary for grocery chains like theirs to survive in a rapidly changing environment in which online shopping is quickly taking over more of the market share. This has been to the benefit of supercenters like Walmart and Amazon, which have large fulfillment centers capable of packaging and delivering those orders.
In a statement, Kroger argued that “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. Kroger’s business model is to take costs out of the business and invest in lowering prices for customers.”
The statement further states that “customers will benefit from lower prices and more choices following the merger close. The company committed to investing $500 million to begin lowering prices day one post-close, and an additional $1.3 billion to improve Albertsons Cos.’ stores.”
