The Federal Trade Commission sued Monday to block the $25 billion merger between grocery giants Albertsons and Kroger, calling the proposed deal anti-competitive.
The agency was joined by nine state attorneys general in the lawsuit, which adds further uncertainty to what would be the biggest grocery-industry merger in U.S. history. Both companies operate thousands of supermarkets across the country under a slew of brand names.
The FTC said combining the two companies under one roof would create higher prices for shoppers and lower wages for workers.
“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,” Henry Liu, director of the FTC’s Bureau of Competition, said in a statement.
The agency’s commission voted 3-0 in favor of pursuing the complaint.
Kroger, whose brands include the Harris Teeter, King Soopers and Fred Meyer supermarket chains, said in a statement Monday that the FTC’s move would “hurt the very people the FTC purports to serve.”
“[O]ur proposed merger with Albertsons will mean even lower prices and more choices for America’s consumers,” the company maintained.
The FTC has taken a more critical stance of large mergers after being reshaped by President Joe Biden’s progressive appointees. The agency has spent more than a year investigating the proposed grocery merger and gathering evidence to determine what its impacts might be for the public.
“Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods.”
- Federal Trade Commission in announcing its lawsuit
The White House said it would not comment on pending litigation. But Jon Donenberg, deputy director for Biden’s National Economic Council, said that the president “supports fair and vigorous antitrust enforcement.”
“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.
Kroger and Albertsons have proposed divesting several hundred stores to prevent too much industry consolidation in certain areas. But the FTC said that the divestiture plan doesn’t go far enough and wouldn’t mitigate the lost competition created by the merger.
The attorneys general who joined the FTC’s lawsuit come from Arizona, California, Illinois, Maryland, Nevada, New Mexico, Oregon, Wyoming and the District of Columbia.
The decision to challenge the Kroger-Albertsons merger drew praise from progressive groups and lawmakers on Monday. Several local unions affiliated with the United Food and Commercial Workers union released a statement applauding the agency and saying the acquisition would have “damaged essential grocery store workers’ wages, benefits and working conditions.”
Kroger, however, called the merger “inherently pro-union,” saying the company had added 100,000 “good-paying union jobs” since 2012.
“In a separate lawsuit filed this month, Colorado’s attorney general alleged that Kroger and Albertsons had previously colluded to reduce workers’ leverage in negotiating new union contracts.”
In a separate lawsuit filed this month, Colorado’s attorney general alleged that Kroger and Albertsons had previously colluded to reduce workers’ leverage in negotiating new union contracts with the grocers. The lawsuit cited emails in which an Albertsons executive told a counterpart at Kroger that his company would not poach Kroger workers while they were on strike, a move that could take pressure off Kroger during the work stoppage.
The Colorado lawsuit argued that the alleged no-poach agreement illustrated how a merger would limit workers’ bargaining power as they tried to boost wages and working conditions. Kroger denied to HuffPost that any no-poach agreement existed.
The FTC said a merger between the two companies would leave the combined Kroger-Albertsons as the only unionized grocery employer in areas such as Denver.
“Union grocery workers’ ability to leverage the threat of a boycott or strike to negotiate better [work] terms would also be weakened,” the agency said.