Mega merger of Kroger and Albertsons at risk

The US Federal Trade Commission (FTC) wants to stop the controversial merger between supermarket chains Kroger and Albertsons, for fear of higher consumer prices and worse working conditions.

Stubborn opposition

In October 2022, Kroger announced it wanted to pay 24.6 billion dollars (over 22 billion euros) to acquire its rival, Albertsons. Together, the chains would form the second largest supermarket group in the United States, with more than 5,000 stores and 700,000 employees in 48 states.

However, opposition to the takeover plans is still stubborn and on Monday, the competition watchdog FTC filed a lawsuit to block it. According to the FTC, the deal would increase prices for millions of consumers, limit choice and lower the quality of products on shelves. Shop employees would also be worse off, as the deal would end competition among the two chains to hire employees. This would make it more difficult for employees to negotiate better wages and working conditions.

Advantage Walmart?

The FTC’s opposition is not unexpected: the commission had already postponed its decision on the merger once, and previously several states had also filed lawsuits to stop the takeover. Since yesterday, nine states have already joined the competition authority’s lawsuit.

Kroger and Albertsons disagree with the FTC’s reasoning: blocking this merger would instead harm customers and help strengthen behemoths such as Amazon, Walmart and Costco by allowing them to further increase their growing dominance in the grocery industry, they responded to US media.

Should the deal indeed be blocked, Ahold Delhaize may want to seize another opportunity to acquire Albertsons. The retailer was seen as a suitable potential acquisition candidate before Kroger’s move, as both groups are highly complementary geographically.