{"id":44114,"date":"2024-02-26T13:19:50","date_gmt":"2024-02-26T18:19:50","guid":{"rendered":"https:\/\/d56fg8tfg.fitnews.club\/finance\/ftc-challenges-krogers-acquisition-of-albertsons\/"},"modified":"2024-02-26T13:19:50","modified_gmt":"2024-02-26T18:19:50","slug":"ftc-challenges-krogers-acquisition-of-albertsons","status":"publish","type":"post","link":"https:\/\/d56fg8tfg.fitnews.club\/finance\/ftc-challenges-krogers-acquisition-of-albertsons\/","title":{"rendered":"FTC Challenges Kroger\u2019s Acquisition of Albertsons"},"content":{"rendered":"
The Federal Trade Commission today sued to block the largest proposed supermarket merger in U.S. history\u2014Kroger Company\u2019s $24.6 billion acquisition of the Albertsons Companies, Inc.\u2014alleging that the deal is anticompetitive.<\/p>\n
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. The loss of competition will also lead to lower quality products and services, while also narrowing consumers\u2019 choices for where to shop for groceries. For thousands of grocery store workers, Kroger\u2019s proposed acquisition of Albertsons would immediately erase aggressive competition for workers, threatening the ability of employees to secure higher wages, better benefits, and improved working conditions.<\/p>\n
\u201cThis supermarket mega merger comes as American consumers have seen the cost of groceries rise steadily over the past few years. Kroger\u2019s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today,\u201d said Henry Liu, Director of the FTC\u2019s Bureau of Competition. \u201cEssential grocery store workers would also suffer under this deal, facing the threat of their wages dwindling, benefits diminishing, and their working conditions deteriorating.\u201d<\/p>\n
The FTC issued an administrative complaint and authorized a lawsuit in federal court to block the proposed acquisition pending the Commission\u2019s administrative proceedings. A bipartisan group of nine attorneys general is joining the FTC\u2019s federal court complaint.<\/p>\n
Kroger operates thousands of stores across 36 states, which includes regional banners such as Fred Meyer, Fry\u2019s, Harris Teeter, King Soopers, Kroger, and Quality Food Centers (QFC). Albertsons also operates thousands of stores across 35 states under regional names including Albertsons, Haggen, Jewel-Osco, Pavilions, Safeway, and Vons. If the merger were completed, Kroger and Albertsons would operate more than 5,000 stores and approximately 4,000 retail pharmacies and would employ nearly 700,000 employees across 48 states.<\/p>\n
Executives for both Kroger and Albertsons have acknowledged that the two supermarkets are direct competitors, forcing each other to aggressively compete for customers by lowering prices and for employees by providing better pay and benefits across the country. Similarly, executives for both supermarket chains have conceded that Kroger\u2019s acquisition of Albertsons is anticompetitive, with one executive reacting candidly to the proposed deal: \u201cyou are basically creating a monopoly in grocery with the merger.\u201d<\/p>\n
Inadequate Divestiture Offering<\/strong><\/p>\n To try to secure antitrust approval of their merger, Kroger and Albertsons have proposed to divest several hundred stores and select other assets to C&S Wholesale Grocers (C&S), which today operates just 23 supermarkets and a single retail pharmacy. The FTC\u2019s administrative complaint alleges that Kroger and Albertsons\u2019s inadequate divestiture proposal is a hodgepodge of unconnected stores, banners, brands, and other assets that Kroger\u2019s antitrust lawyers have cobbled together and falls far short of mitigating the lost competition between Kroger and Albertsons.<\/p>\n The FTC says the proposed divestitures are not a standalone business, and C&S would face significant obstacles stitching together the various parts and pieces from Kroger and Albertsons into a functioning business\u2014let alone a successful competitor against a combined Kroger and Albertsons. The proposal completely ignores many affected regional and local markets where Kroger and Albertsons compete today. In areas where there are divestitures, the proposal fails to include all of the assets, resources, and capabilities that C&S would need to replicate the competitive intensity that exists today between Kroger and Albertsons. Even if C&S were to survive as an operator, Kroger and Albertsons\u2019s proposed divestitures still do not solve the multitude of competitive issues created by the proposed acquisition, according to the complaint.<\/p>\n Harm to Consumers<\/strong><\/p>\n In addition to raising grocery prices, the FTC alleges that Kroger\u2019s acquisition of Albertsons would also diminish their incentive to compete on quality. Today, Kroger and Albertsons compete to improve their stores in many ways, including offering fresher produce, higher quality products, improved private label offerings, a broader array of in-store services, flexible store and pharmacy hours, and curbside pickup services.<\/p>\n The FTC charges that the deal would eliminate head-to-head price and quality competition, which have driven both supermarkets to lower their prices and improve their product and service offerings. If the merger takes place, grocery prices will increase, and Kroger and Albertsons\u2019 incentive to improve product quality and customer service will decrease, further harming customers.<\/p>\n Harm to Workers<\/strong><\/p>\n Kroger and Albertsons are the two largest employers of union grocery labor in the United States. They actively compete against one another for workers. The two companies also try to poach grocery workers from each other, especially in local markets where they overlap. Currently, most workers for both supermarket chains are members of the United Food and Commercial Workers (UFCW) union.<\/p>\n Today, UFCW and other unions leverage the fact that Kroger and Albertsons are separate and competing companies. Unions push for both supermarket chains to negotiate better employment terms for union grocery workers, especially when negotiating over collective bargaining agreements (CBAs).<\/p>\n A combined Kroger\/Albertsons, however, would gain increased leverage over workers and their unions\u2014to the detriment of workers, the FTC alleges. The combined Kroger and Albertsons would have more leverage to impose subpar terms on union grocery workers that slow improvements to wages, worsen benefits, and potentially degrade working conditions. In some regions, such as in Denver, the combined Kroger\/Albertsons would be the only employer of union grocery labor. Union grocery workers ability to leverage the threat of a boycott or strike to negotiate better CBA terms would also be weakened.<\/p>\n The Offices of the Attorneys General of Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon, and Wyoming are joining the Commission\u2019s federal lawsuit.<\/p>\n The Commission vote to issue the administrative complaint and authorize staff to seek a temporary restraining order and preliminary injunction in federal district court was 3-0. The federal court complaint and request for preliminary relief will be filed jointly with the state attorneys general in the U.S. District Court for the District of Oregon.<\/p>\n A public version of the complaint will be available and linked to this news release as soon as possible.<\/p>\n NOTE:<\/strong> The Commission issues an administrative complaint when it has \u201creason to believe\u201d that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of the administrative complaint marks the beginning of a proceeding in which the allegations will be tried in a formal hearing before an administrative law judge.<\/p>\n<\/div>\n