BUSINESS + ECONOMY

US sues to block merger of grocery giants Kroger and Albertsons

Feb 26, 2024, 10:26 AM | Updated: 10:34 am

The Federal Trade Commission sued to block a proposed merger between grocery giants Kroger and Albe...

The Federal Trade Commission sued to block a proposed merger between grocery giants Kroger and Albertsons, saying the $24.6 billion deal would eliminate competition and lead to higher prices for millions of Americans. (L - Brandon Bell/Getty Images) (R - Mario Tama/Getty Images)

(R - Mario Tama/Getty Images)

The Federal Trade Commission sued to block a proposed merger between grocery giants Kroger and Albertsons, saying the $24.6 billion deal would eliminate competition and lead to higher prices for millions of Americans.

The FTC filed a lawsuit in U.S. District Court in Oregon on Monday. It was joined in the suit by the attorneys general of eight states and the District of Columbia.

Kroger and Albertsons, two of the nation’s largest grocers, agreed to merge in October 2022. The companies said a merger would help them better compete with Walmart, Amazon, Costco and other big rivals. Together, Kroger and Albertsons would control around 13% of the U.S. grocery market; Walmart controls 22%, according to J.P. Morgan analyst Ken Goldman.

Kroger, based in Cincinnati, Ohio, operates 2,750 stores in 35 states and the District of Columbia, including brands like Ralphs, Smith’s and Harris Teeter. Albertsons, based in Boise, Idaho, operates 2,273 stores in 34 states, including brands like Safeway, Jewel Osco and Shaw’s. Together the companies employ around 700,000 people.

But the merger, announced at a time of high food-price inflation, was bound to get tough regulatory scrutiny. U.S. prices for food eaten at home typically rise 2.5% per year, but in 2022 they rose 11.4% and in 2023 they rose another 5%, according to government data. Inflation is cooling, but gradually.

“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, the director of the FTC’s Bureau of Competition, said in a statement.

The FTC, which said the proposed deal would be the largest grocery merger in U.S. history, said it would also erase competition for workers, threatening their ability to win higher wages, better benefits and improved working conditions.

The Biden administration has also shown a willingness to challenge big mergers in court. Last month, the Justice Department sued to block a proposed merger between JetBlue Airways and Spirit Airlines.

The action by the FTC and the states follows lawsuits filed earlier this year in Colorado and Washington to block the merger. The states that joined the FTC lawsuit Monday are Arizona, California, Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming.

Kroger has promised to invest $500 million to lower prices as soon as the deal closes. It said it also invested in price reductions when it merged with Harris Teeter in 2014 and Roundy’s in 2016. Kroger also promised to invest $1.3 billion in store improvements at Albertsons as part of the deal.

Last year, C&S Wholesale Grocers agreed to purchase 413 stores and eight distribution centers that Kroger and Albertsons agreed to divest in markets where the two companies’ stores overlapped. C&S said it would honor all collective bargaining agreements with workers.

Still, the United Food and Commercial Workers union, which represents 835,000 grocery workers in the U.S. and Canada, voted last year to oppose the merger, saying Kroger and Albertsons had failed to be transparent about the potential impact of the merger on workers.

The union was also critical of a $4 billion payout to Albertsons shareholders that was announced as part of the merger deal. Several states, including Washington and California, tried unsuccessfully to block the payment in court, saying it would weaken Albertsons financially.

Kroger and Albertsons had hoped to close the deal early this year. But the two companies announced in January that it was more likely to close in the first half of Kroger’s fiscal year. Kroger’s fiscal second quarter ends Aug. 17.

We want to hear from you.

Have a story idea or tip? Send it to the KSL NewsRadio team here.

Business + Economy

Utah small business...

Adam Small

Several small Utah cities named best in country for starting businesses

Utah boasts several small cities that are ranked among some of the best in the country to start up a small business.

18 hours ago

A car is filled at a gas pump in Sandy on Tuesday, March 19, 2024. Hurricane season could affect ga...

Britt Johnson

Hurricane season could mean bad news for Utah gas prices

Hurricane season is expected to be intense this year, and while none of them should hit Utah rising gas prices probably will. 

4 days ago

The Delta Center shown...

CHANDLER HOLT AND JAY STEVENS, KSL SPORTS

League approves new NHL team in Utah, owned by Ryan, Ashley Smith

The NHL Board Of Governors approved the establishment of a new hockey franchise (previously Arizona Coyotes) in Utah by Ryan Smith.

4 days ago

slc skyline, the state has introduced the Startup State Initiative...

Heather Peterson

Utah launches Startup State Initiative to help entrepreneurs and small businesses

The Startup State Initiative helps Utahns conduct market research, create a business plan, or network with community partners.

5 days ago

An NYU study shows that people with volatile work schedules are more likely to have health concerns...

Emma Keddington

Volatile work schedules linked to burnout and health problems

A new study finds that volatile work schedules causes burnout and is detrimental to overall health.

5 days ago

Signs are posted for the 2024 Sundance Film Festival on Main Street in Park City on Thursday, Jan. ...

Collin Leonard, KSL.com

Sundance Institute seeks proposals for future location of film festival

The institute is asking for formal proposals in an initial information-gathering period.

6 days ago

Sponsored Articles

Young couple hugging while a realtor in a suit hands them keys in a new home...

Utah Association of Realtors

Buying a home this spring? Avoid these 5 costly pitfalls

By avoiding these pitfalls when buying a home this spring, you can ensure your investment will be long-lasting and secure.

a person dressed up as a nordic viking in a dragon boat resembling the bear lake monster...

Bear Lake Convention and Visitors Bureau

The Legend of the Bear Lake Monster

The Bear Lake monster has captivated people in the region for centuries, with tales that range from the believable to the bizarre.

...

Live Nation Concerts

All the artists coming to Utah First Credit Union Amphitheatre (formerly USANA Amp) this summer

Summer concerts are more than just entertainment; they’re a celebration of life, love, and connection.

Mother and cute toddler child in a little fancy wooden cottage, reading a book, drinking tea and en...

Visit Bear Lake

How to find the best winter lodging in Bear Lake, Utah

Winter lodging in Bear Lake can be more limited than in the summer, but with some careful planning you can easily book your next winter trip.

Happy family in winter clothing at the ski resort, winter time, watching at mountains in front of t...

Visit Bear Lake

Ski more for less: Affordable ski resorts near Bear Lake, Utah

Plan your perfect ski getaway in Bear Lake this winter, with pristine slopes, affordable tickets, and breathtaking scenery.

front of the Butch Cassidy museum with a man in a cowboy hat standing in the doorway...

Bear Lake Convention and Visitors Bureau

Looking Back: The History of Bear Lake

The history of Bear Lake is full of fascinating stories. At over 250,000 years old, the lake has seen generations of people visit its shores.

US sues to block merger of grocery giants Kroger and Albertsons