The latest salvo in the war over the proposed merger between retail giants Kroger and Albertson has been fired by four U.S. senators and two U.S. Representatives, who in a December 11 letter urged the Federal Trade Commission (FTC) to reject the merger.
The letter was signed by Sen. Elizabeth Warren (D-MA), Sen. Mazie Hirono (D-HI), Sen. Bernie Sanders (I-VT), Sen. Cory Booker (D-NJ), Rep. Summer A. Lee (D-PA), and Rep. Alexandra Ocasio-Cortez (D-NY).
“The merger would result in a duopoly with Walmart, with the two corporations controlling more than 70 percent of the grocery market in over 160 cities across the country,” said the letter. “A grocery megamerger also increases the risk that firms will violate the Robinson-Patman Act, a longstanding but under-enforced law that prohibits sellers from engaging in price discrimination among different buyers.”
The letter also criticized “a divestiture plan to sell 413 stores and other assets to C&S Wholesale Grocers (C&S), in an attempt to assuage competition concerns raised by the merger.” The two companies proposed the divestiture in September 2023.
“This divestiture plan will not ameliorate harms to consumers, workers, and the grocery industry as a whole if the merger is allowed,” the letter continued.
The legislators scoffed at Kroger’s and Albertsons’ proposed remedy. “Structural remedies, such as a divestiture of a number of assets, often fail to address harms to competition—in part because companies have an incentive to ensure the failure of spun-off companies, and do not mitigate price increases and other negative effects on consumers.”
The legislators had in mind the Safeway-Albertsons merger of 2016, which divested a number of stores to a small retail chain called Haggen Holdings LLC, which proved unable to manage them and filed bankruptcy. Kroger, Albertsons, and Lina Khan – Produce Blue Book
Haggen sued the Albertsons Goliath, contending that it gave Haggen muddled data, failed to provide promised software, understocked stores, and even sabotaged the Haggen expansion with an ad campaign to work against the smaller company. https://www.tastingtable.com/1053572/why-grocery-chain-haggen-once-sued-albertsons/
Haggen filed a $1 billion suit and walked away with a settlement of $5.75 million.
“Past experience with Albertsons’ structural remedies indicates that the new proposal will not cure the anticompetitive harms of the deal,” the legislators contend.
The lawmakers also cited the Ahold-Delhaize merger of 2013. The merged entity “sold 81 stores to a number of smaller buyers. As of today, 16 of those stores have been permanently closed, and two stores were sold back to Ahold Delhaize.”
The lawmakers go on to point out that “thousands of employees lost their jobs as the result of store closings in the Albertsons-Safeway debacle—and the FTC’s efforts failed to preserve competition in local communities.”
“Kroger has said that it will not close any stores, distribution centers or manufacturing facilities or lay off any frontline associates as a result of the merger,” reports Reuters.
But it is prudent to conclude that any promises made by Kroger and Albertsons have the full and binding legal effect of promises in general.
