The biggest supermarket merger in US history, according to the Federal Trade Commission, would result in higher pricing, closures of stores, and decreased employment. The FTC filed a lawsuit on Monday to stop the $25 billion agreement between Kroger and Albertsons.
The goal of the 2022 merger was to unite the nation’s 5th and tenth-largest shops. Numerous chains, such as Safeway, Vons, Harris Teeter, and Fred Meyer, are owned by these firms.
However, the proposed merger coincided with a sharp increase in food costs. The Bureau of Labor Statistics reports that since 2020, Americans have increased their grocery spending by 26% and are now spending the largest percentage of their earnings on food out of the last 30 years.
The merger would end competition in the supermarket business, according to a statement from the Federal Trade Commission, which could result in even increased costs.
With a majority union workforce, Kroger (KR) and Albertsons announced their intention to merge in order to increase their competitiveness against non-union huge companies like Costco, Amazon, and Walmart. The rapidly expanding German discount supermarket company Aldi is also putting further pressure on the grocery stores.
When the agreement was first announced, Kroger CEO Rodney McMullen stated that the merger will strengthen “our position as an even more attractive option to bigger and non-union competitors.”
Together, the two businesses employ 710,000 people, operate close to 5,000 locations, and generate over $200 billion in revenue. The corporations contended that they would be able to lower consumer pricing and customize promotions and discounts with the $500 million in cost reductions from the agreement.
However, the FTC expressed doubts about the assertion in its lawsuit.
“The price of groceries has been rising steadily for American consumers throughout the last few years, which coincides with this massive merger of supermarkets.” Henry Liu, director of the FTC’s Bureau of Competition, predicted that further grocery price increases for everyday commodities will result from Kroger’s acquisition of Albertsons.