New York (CNN) — The Federal Trade Commission (FTC) has taken action to block the $25 billion deal between Kroger and Albertsons, citing concerns that the merger could lead to higher prices, store closures, and job losses. This move marks the largest supermarket merger in U.S. history.
The proposed merger, announced in 2022, aimed to combine the fifth and tenth largest retail chains in the country. Kroger and Albertsons, which own brands such as Safeway, Vons, Harris Teeter, and Fred Meyer, have faced increasing pressure amid soaring food prices. Americans have seen a 26% increase in grocery spending since 2020, with food costs taking up the highest portion of income in the past 30 years, according to the Bureau of Labor Statistics.
The FTC raised concerns that the merger would eliminate competition in the grocery industry, potentially leading to even higher costs for consumers. Kroger and Albertsons, both of which employ predominantly union workers, argued that the merger was necessary to compete against non-union giants like Walmart, Amazon, and Costco.
Despite plans to use cost savings from the deal to reduce prices for consumers, the FTC remained skeptical. The agency’s lawsuit was supported by unions, small business owners, and a bipartisan group of lawmakers on Capitol Hill who opposed the merger from the start.
In response to the FTC’s decision, Kroger criticized the move, stating that it would harm consumers and workers. The company plans to appeal the ruling while continuing to defend the benefits of the merger.
To address antitrust concerns, Kroger and Albertsons proposed selling about 400 stores to C&S Wholesale Grocers. However, the FTC raised doubts about the effectiveness of these divestments, pointing to past failures such as Albertsons’ merger with Safeway in 2014.
FTC Chair Lina Khan, known for her critical views on divestments, has expressed skepticism about the Kroger-Albertsons deal. The agency’s action highlights growing concerns about competition in the grocery industry and the impact on consumers and workers.
The future of the Kroger-Albertsons merger remains uncertain as both parties navigate legal challenges and regulatory scrutiny. The outcome of this high-profile case could have far-reaching implications for the supermarket industry and the broader economy.