The Biden administration is suing to block a proposed merger between Kroger and Albertsons supermarket chains, saying the deal would lead to higher food prices for consumers.
The Federal Trade Commission announced the suit in a release Monday on its website.
"The FTC charges that the proposed deal will eliminate fierce competition between Kroger and Albertsons, leading to higher prices for groceries and other essential household items for millions of Americans," it said. "The loss of competition will also lead to lower quality products and services, while also narrowing consumers’ choices for where to shop for groceries."
Americans have seen food-at-home prices climb more than 20% since the beginning of the pandemic, though more recently those cost pressures have eased. The USDA reported that U.S. consumers spent an average of 11.3% of their disposable personal income on food in 2022 — reaching levels similar to the 1980s, though much of this increase was attributable to large gains in food consumed away from home.
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Kroger, the second-largest grocer in the nation behind Walmart; and Albertson's, the fourth-largest behind Costco, first announced the proposed $25 billion deal in December 2022. It was premised on the chains operating in different parts of the country. If successful, the tie-up would lead to a company with 710,000 workers operating nearly 5,000 stores and approximately 4,000 pharmacies.
But the FTC said in its suit the the merger could also make wages for workers less competitive by eliminating competition.
“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 the release. “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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In a statement, Kroger criticized the Biden administration's suit.
"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," the company said.
An Albertsons spokesperson issued a similar statement, saying the proposed merger would "expand competition, lower prices, increase associate wages, protect union jobs, and enhance customers shopping experience."
"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."
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