The grocery company Kroger is planning to acquire smaller rival Albertsons for $24.6 billion, but the U.S. Federal Trade Commission and eight states said on Monday that they are suing to stop the merger, claiming it will drive up grocery prices for millions of Americans.
Legislators and consumer advocacy organizations are closely monitoring the merger, which if approved would establish a grocery empire with over 4,000 locations. They are concerned about increased grocery costs, job losses, store closures, and a reduction in consumer choice.
According to the FTC, the agreement will end the “strong competition between Albertsons and Kroger,” which will drive up costs for food and other necessities for millions of Americans.
The price of Kroger’s stock had dropped by 1%. Albertsons’ stock increased by 0.7%.
According to the FTC, the commission’s federal complaint will be joined by Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon, and Wyoming.
Attorney General Rob Bonta of California has expressed worries on the availability of pharmacies and fresh produce for the impoverished in small towns and rural areas.
The ruling was made soon after Colorado and Washington, two American states, filed a lawsuit to stop the merger on the grounds that consumers would pay more.
“The cost of goods has been slowly rising for American consumers over the past few years, which coincides with this massive supermarket merger. As a result of Kroger’s acquisition of Albertsons, everyday products will see more price increases at grocery stores, worsening the financial hardship that Americans already endure, according to Henry Liu, Director of the FTC’s Bureau of Competition.
In the event that its merger with Albertsons is disallowed, Kroger has stated that retailers like Walmart and Amazon.com will grow “even more powerful and unaccountable”.
The FTC’s settlement agreement coincides with the Biden administration’s pushback against large-scale acquisitions that run the danger of raising prices for consumers in a variety of markets, including pharmaceuticals and airline tickets.
Recent years have seen a decline in incomes and a lowering of optimism over the economy due to food inflation, which has increased the price of eggs, chicken, bacon, and butter among other foods.
The largest grocery store in the United States in terms of revenue, Kroger, has suggested selling 413 locations and eight distribution hubs to C&S Wholesale Grocers. It has also stated that it could have to sell 237 more locations in order to receive regulatory permission. The FTC deemed the suggestion to be insufficient.
At least six US senators, including Senators Elizabeth Warren and Bernie Sanders, opposed the acquisition as well. In letters to the Federal Trade Commission, they emphasized the negative effects that such a consolidation in the supermarket business would have on suppliers and customers.
The United Food and Commercial Workers International Union, which represents over a million workers in the grocery and other vital industries in North America, decided in May of last year to oppose the merger, which was first proposed in October 2022.