Oregon joins lawsuit blocking Kroger-Albertsons ‘mega merger’
PORTLAND, Ore. (KOIN) – As the Federal Trade Commission issues a lawsuit to block a proposed merger between Kroger and Albertsons, Attorney General Ellen Rosenblum has stepped forward to “protect Oregon consumers and workers.”
The suit claims the $24.6 billion deal would eliminate competition between the nation’s two largest grocery chains, which operate 176 stores in Oregon alone. Rosenblum is among several attorneys general who say the merger would lead to higher prices across the country.
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“If big grocery stores are allowed to reduce competition this way, they can charge higher prices for food for no good reason and reduce services, including in their pharmacies. They can also slow the growth of employees’ wages, or even reduce some of those wages,” Rosenblum said. “Working conditions and employee benefits can suffer, as well. In short, there’s no good for consumers or workers in this proposed merger — and lots of bad.”
The two companies agreed to merge in October 2022 and initially planned to close the deal in early 2024. However, they now aim to do so before the end of the first half of Kroger’s fiscal year – which ends on Aug. 17.
If the merger goes through, then Kroger and Albertsons would control about 13% of all U.S. grocery stores. The companies claim that percentage would help them compete with rivals like Walmart, which controls 22% of the market.
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According to FTC Director Henry Liu, maintaining competition between Kroger and Albertsons forces the chains to maintain low prices for their goods and services.
“This supermarket mega-merger comes as American consumers have seen the cost of groceries rise steadily over the past few years,” Liu said. “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.”
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Oregon is home to 55 Kroger stores, including 51 Fred Meyers and four QFCs, as well as 121 Albertsons-operated stores, including 96 Safeways and 25 Albertsons.
Statements
In response to the lawsuit, Albertsons shared the following statement:
“Albertsons Cos. merging with Kroger will 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. In contrast, Albertsons Cos.’ merger with Kroger will ensure our neighborhood supermarkets can better compete with these mega retailers, all while benefitting our customers, associates, and communities. We are disappointed that the FTC continues to use the same outdated view of the U.S. grocery industry it used 20 years ago, and we look forward to presenting our arguments in Court.”
Kroger officials issued a lengthy statement. In part, they said:
“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.
“Kroger’s business model is to take costs out of the business and invest in lowering prices for customers. Kroger has reduced prices every year since 2003, resulting in $5 billion invested to lower prices and a 5% reduction in gross margin over this period. This business model is immediately applied to merger companies. Kroger has a proven track record of lowering prices so more customers benefit from fresh, affordable food, and our proposed merger with Albertsons will mean even lower prices and more choices for America’s consumers.
“The FTC’s decision makes it more likely that America’s consumers will see higher food prices and fewer grocery stores at a time when communities across the country are already facing high inflation and food deserts. In fact, this 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. …”
Oregon US Sen. Ron Wyden also opposes the merger. He said:
““I called for the FTC to block this merger because it would raise grocery and prescription costs for Oregonians across our state, and it’s clear the FTC agrees. Another strike against this merger is the toll it would take on our veterans and servicemembers who will be forced to drive further to get the care they need with fewer pharmacies accepting TRICARE. The merger would also reduce the power of Oregon’s small farmers, growers and other small businesses to negotiate prices for their goods. I fully support FTC’s decision to take a closer look at this proposed merger — it is a smart call by President Biden to prioritize lowering prices for Americans and Oregonians, protecting access to prescription drugs, and maintaining the power of unions.”
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