By Zach Brown
Here we go again: corporate America is trying to gain more power.
Currently, there is a proposed merger on the table between our nation’s two largest grocery store chains, Kroger and Albertsons. It’s worth noting that these two chains are conglomerates themselves separately, as Kroger encompasses the popular retail brands of Harris Teeter and Fred Meyer while Albertsons is also the parent company of Safeway and Vons. And as consumers across the country are already having to deal with rising grocery prices, now is certainly not time to allow such an egregious merger to take place.
And right on cue, the Senate Judiciary committee held a hearing addressing the many pitfalls that could come from such a substantial merger.
Throughout the hearing, we heard not only from top executives from Kroger and Albertsons (Kroger Chief Executive Rodney McMullen and Albertsons CEO Vivek Santaran to be exact), but also from marketplace competition experts like Sumit Sharma of Consumer Reports. And while the cagey executives from Kroger and Albertsons repeatedly argued throughout the hearing that this colossal merger would somehow benefit consumers, Sharma rightfully pointed out several key holes in their argument.
For one, the very nature of a merger between the two biggest U.S. supermarkets significantly lowers the amount of competition in the grocery marketplace, leading to higher prices and fewer choices for consumers across the board. And at a time when our nation is already dealing with exorbitant food prices, now is no time for the Federal Trade Commission to approve such a damaging transaction.
Second, given the past history of mergers, Kroger and Albertson’s current plan to divest several of their stores to alleviate the harm will likely fail to provide relief. In order to lower the total market share that will be held by a combined entity after the merger, it is common for assets to be sold off an to become independent entities unto themselves. However, given the lack of resources available to the stores that are spun off from the two companies, it is more likely that these new grocery stores will either fail, or eventually be bought back by Kroger-Albertsons (should the merger be approved) at a later date.
We saw this firsthand when observing the aftermath of the Albertson-Safeway merger in 2015. While the post-merger company agreed to sell off 146 stores to Haggen Food and Pharmacy as a part of their 9 billion dollar merger agreement, just 9 months later Haggen Food and Pharmacy filed for bankruptcy, failing to find success in an a market dominated by grocery conglomerates. Albertsons was even able to buy back several of the stores after the bankruptcy. Does any of this sound good for consumers?
And while Kroger CEO Rodney McMullen boldly claimed that no frontline associates would be laid off as a result of the potential merger, workers around the country have a valid right to be concerned given a long history of broken promises. We heard from these affected workers directly in a recent statement by the United Food and Commercial Workers International Union (UFCW), as Albertsons and Kroger employees across the country publicly speak out against the merger.
For the future prosperity of our grocery store landscape, this $24.6 billion merger deal between Kroger and Albertsons that would create a corporate behemoth of almost 5,000 stores must be stopped. We at Public Citizen will continue to push federal antitrust officials to make the right decision for consumers and workers across the nation.