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The Federal Trade Commission has filed a lawsuit to block Kroger's takeover of Albertsons, threatening the largest supermarket merger in U.S. history and the latest sign of Washington's crackdown on anti-competitive behavior.
The Federal Trade Commission (FTC) on Monday objected to the $24.6 billion acquisition, claiming it would eliminate competition between the two companies, increase grocery prices and harm product quality and consumer choice. The deal would also reduce competition for workers and hinder their ability to earn higher wages, according to the complaint, which was joined by a bipartisan group of nine attorneys general from districts including California and Wyoming.
The combined entity will operate more than 5,000 stores and about 4,000 retail pharmacies while employing nearly 700,000 employees in 48 states, the Federal Trade Commission said.
A Kroger spokesman said blocking the deal “would hurt the people the FTC claims to serve: America's consumers and workers.” The companies said combining them would instead increase competition, lower prices and improve wages, and vowed to challenge the move in court.
“We are disappointed that the FTC continues to use the same outdated view of the American grocery industry that it used 20 years ago,” an Albertsons spokesperson said.
The committee's intervention comes against the backdrop of the White House's efforts to reduce the cost of living while President Joe Biden seeks re-election this year. While inflation is now falling around the world after interest rates rose, Biden has faced rising prices that have dented Americans' view of the economy for much of his presidency.
“This massive supermarket consolidation comes at a time when American consumers have seen the cost of groceries steadily rise over the past few years,” noted Henry Liu, director of the Federal Trade Commission's Bureau of Competition. The deal “will lead to additional hikes in grocery prices for everyday goods, further exacerbating the financial pressures consumers across the country face today,” he said.
Biden has also sought to crack down on anti-competitive behavior in business by appointing progressive officials to top positions, including Federal Trade Commission Chairwoman Lina Khan. This new generation of “trust busters” complains about excessively lax antitrust policies in recent decades, which they say has hurt competition across the US economy.
The FTC's move reflects some of the themes in its tougher antitrust stance, including finding the companies' proposal to divest several hundred stores and other assets “inappropriate.” These consisted of a “hodgepodge of uncorrelated assets” that would be difficult to transform into a “successful competitor,” the committee said.
The agency also focused on the allegedly harmful effects the deal would have on workers, saying the combined entity would “gain increased influence over workers and their unions.” In some places, such as Denver, the combined company will be the sole employer of unionized grocery workers, the FTC said.
Earlier this year, Colorado and Washington also sued to block the deal, a move the companies are set to challenge in court.
