The Federal Trade Commission filed a lawsuit to stop Kroger from acquiring Albertsons. This would be the largest supermarket merger ever in US history, and is the latest example of Washington’s anti-competitive crackdown.
The FTC on Monday contested the $24.6bn purchase . It claimed that the deal would eliminate competition, increase grocery prices, and harm the quality of products and consumer choice. According to the complaint, it would also reduce competition among workers and hinder their ability to get higher wages. The group was composed of nine attorneys general from different regions, including California and Wyoming.
FTC stated that the combined entity would employ nearly 700,000 people in 48 states and operate over 5,000 retail stores.
A Kroger spokeswoman said that blocking the agreement would “harm those people who the FTC claims to be serving: America’s workers and consumers”. The companies say that their combination will increase competition and lower prices, while improving wages. They have pledged to fight the FTC’s decision in court.
Albertsons spokeswoman said: “We’re disappointed that the FTC still uses the same outdated view on the US grocery industry as it did 20 years ago.”
As President Joe Biden runs for re-election in this year, the commission intervenes as the White House struggles to reduce living costs. Biden, whose presidency was marked by high prices and a deteriorating view of the economy in America, has been fighting inflation worldwide since interest rates rose.
Henry Liu of the FTC Bureau of Competition noted that “this supermarket megamerger is coming at a time when American consumers have been seeing the cost of grocery rise steadily in the last few years.” He said that the deal would lead to further grocery price increases for everyday items, thereby increasing the financial burden on consumers.
Biden also wants to clamp down on business practices that are anti-competitive, by appointing progressive officials at senior levels. This includes FTC Chair Lina Khan. This new generation “trust-busters” is blaming the laxity of antitrust policies in recent decades for harming competition throughout the US economy.
The FTC’s decision reflects its more aggressive antitrust stance. It found that the companies’ plan to sell several hundred stores, and other assets was “inadequate”. The FTC said that these assets were a “hodgepodge” of unconnected assets, which would make it difficult to create a “successful rival”.
The FTC also highlighted the supposed negative effects of the merger on workers, stating that the combined entity would “gain increased leverage over employees and their unions”. The FTC stated that in some areas, like Denver, the combined business would be solely responsible for the employment of unionised grocery employees.
The states of Colorado, Washington, and Oregon had sued earlier this year to block the deal. These companies will now challenge the decision in court.