The U.S. anti-competitive watchdog sued February 26 to block the country’s largest-ever supermarket merger, citing fears that the deal would raise prices for millions of consumers.
According to The Guardian, the Federal Trade Commission (FTC) 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 FTC also claimed the planned merger would halt “aggressive competition” for employees, threatening their ability to secure better pay, benefits and working conditions.
Kroger countered by claiming that blocking its purchase of Albertsons might actually increase prices. Both companies said they would make their case in court.
A conjoined Kroger and Albertsons would control around 13% of the U.S. grocery market, with 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.
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.”
Walmart controls 22% of the U.S. grocery market, according to J.P. Morgan, with Amazon holding 3%. In 2022, the leading 10 grocery stores in the United States held close to 60% of the total industry market share.
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- Source: https://www.supplychainbrain.com/articles/39169-ftc-seeks-to-block-largest-ever-us-supermarket-merger
