FTC, state AGs sue to block Kroger-Albertsons merger

The Federal Trade Commission (FTC) sued to block Kroger’s $24.6 billion acquisition of the Albertsons, alleging the “largest proposed supermarket merger in U.S. history” could hurt competition, lead to higher prices and harm workers.

Nine bipartisan attorneys general from Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming joined the FTC in the lawsuit.

“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.

Kroger, which operates several regional brands including Harris Teeter, and Albertsons, whose regional brands include Safeway, are two of the largest competitors in the grocery industry. 

“It is clear that Arizonans in rural and urban communities alike are seriously concerned about the potential for drastic changes to their daily lives if this merger goes through,” Arizona Attorney General Kris Mayes (D) said.

“Bottom line: this merger will benefit the shareholders of these companies, not regular Arizonans. I am proud to stand with the FTC and my fellow attorneys general in suing to block this anticompetitive, anti-consumer, and anti-worker merger.”

A Kroger-Albertsons merger would bring more than 5,000 stores across 48 states under one roof, worrying federal regulators, lawmakers and consumer advocates.

“Giant grocery chains are price gouging American families, and the @Kroger-@Albertsons merger threatens higher prices for consumers, store closures, and lower wages for workers,” Sen. Elizabeth Warren (D-Mass.) wrote on X, the platform formerly known as Twitter. “By blocking this deal, the @FTC is fighting to both protect workers’ jobs and lower food prices.”

The large supermarket chains have argued the merger is necessary to compete with Amazon, Walmart and Costco, which they say are growing increasingly powerful in the industry.

“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,” an Albertsons spokesperson said in a statement.

A Kroger spokesperson said the decision “only strengthens larger, non-unionized retailers like Walmart, Costco and Amazon by allowing them to further increase their overwhelming and growing dominance of the grocery industry.”

Snce the Kroger-Albertsons merger was first announced in 2022, consumer advocates, unions and lawmakers have urged the FTC to investigate the proposed deal and take action to protect consumers and the company’s workers.

The deal could cost workers a total of $334 million each year, an average of $450 per employee, according to a May 2023 policy brief by the Economic Policy Institute, a left-leaning, pro-union think tank.

The United Food and Commercial Workers International Union (UFCW) has maintained that it would oppose any merger that would harm the 1.2 million workers in grocery stores, meatpacking and food processing facilities, and other key food supply chain players it represents.

The UFCW said in a statement that “any company who is looking to purchase stores must first and foremost honor our collective bargaining agreements and be committed to protecting these essential jobs now and in the years ahead.”

“Regardless of the next legal steps, we must never forget that Kroger and Albertsons are successful because of these incredibly dedicated workers, and no proposed merger should be allowed to endanger their jobs or their livelihoods,” the UFCW added.

Jon Donenberg, the White House National Economic Council’s deputy director and director for competition council policy, said that while the White House doesn’t comment on pending lawsuits, President Biden has repeatedly voiced his support for antitrust enforcement.

The FTC under the Biden administration has cracked down on mergers across industries, with mixed results. The agency successfully blocked JetBlue’s proposed acquisition of Spirit Airlines, for example, but lost its challenge to Microsoft’s acquisition of video game maker Activision Blizzard.

“President Biden has made clear that competition is key to capitalism. When large corporations are not checked by healthy competition, they too often do not pass cost savings on to consumers and exploit their workers,” Donenberg said.

Updated at 2 p.m.