FTC Sues to Block Kroger and Albertsons Merger

The Federal Trade Commission sued to block Kroger’s $25 billion dollar bid for Albertsons. The move puts the largest supermarket deal in history into an uncertain fate. In a lawsuit filed in federal court on Monday, February 26th, the FTC said the deal would lead to higher food prices and harm union workers. Kroger and Albertsons plan to address the government’s concern was to sell hundreds of stores in Washington, Colorado, Illinois, and other states. The FTC said that move will not solve the problem. “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. Kroger said that the FTC’s decision makes it more likely that U.S. consumers will see higher prices and fewer grocery stores, while strengthening nonunionized retailers. A Albertsons spokesman agreed and said that the combined retailer would be a stronger competitor against Amazon, Walmart, and Costco. The FTC challenge comes as U.S. consumers income spent on food has reached a 30-year high. 

Kroger and Albertsons are the largest and second-largest grocery chains in terms of sales. Kroger operates 2,700 stores and has a 10.1% share of the U.S. grocery market. Regional chains include Fred Meyer, Ralphs, Mariano’s, Harris Teeter, Fry’s, King Soopers, Roundy’s, and Smith’s. Albertsons runs 2,300 supermarkets and has a 6.4% share of the U.S. grocery market. Banners include Safeway, Jewel-Osco, Vons, Haggen, Shaw’s, and Star Markets. The suit sets up another battle for U.S. anti-trust enforcers as the FTC recently challenged Microsoft’s bid to acquire Activision and Jet Blue’s bid to buy Spirit Airlines. In an effort to get ahead of a battle with the FTC, Kroger and Albertsons announced a $2 billion dollar deal to sell of 413 stores to C&S Wholesale Grocery in September and then upped the ante to 510 stores in January. A court will now have to decide how much competition is lost due to the merger. If the deal is terminated, Kroger will have to pay Albertsons $600 million dollars.