By Katabella Roberts
Contributing Writer
The U.S. Federal Trade Commission argued in court on Monday that Kroger Co.’s planned $25 billion purchase of rival Albertsons Companies Inc. is anti-competitive and could send food prices soaring for Americans.
The FTC made the arguments during a hearing in the U.S. District Court in Portland, Oregon, as the agency seeks a preliminary injunction against the deal.
It comes nearly two years after the planned acquisition was first announced.
“Stopping this multibillion-dollar deal will keep in place the vigorous competition that acts as a check on rising grocery prices and spurs improvements in quality and innovation,” FTC Chief Trial Counsel Susan Musser told U.S. District Judge Adrienne Nelson in her opening statements.
Cincinnati, Ohio-based Kroger and Boise, Idaho-based Albertsons announced what was set to be the biggest merger of supermarket chains in U.S. history in October 2022.
According to a joint statement from the companies at the time, the approximately $24.6 billion merger agreement would establish a national footprint, expand customer reach, and “improve proximity to deliver fresh and affordable food” to millions of households.
Kroger operates thousands of stores across 36 states and is the biggest grocer in the country by revenue while Albertsons is the second-largest supermarket chain.
If the merger were to be completed, the two grocery giants would operate about 5,000 stores and approximately 4,000 retail pharmacies and would employ nearly 700,000 employees across 48 states under one corporate umbrella.
Since the announcement, the planned acquisition has become the subject of multiple lawsuits, including a private legal challenge filed in California on behalf of consumers.
In February of this year, the FTC also sued to prevent the acquisition from moving forward, alleging it is anti-competitive and would lead to higher prices for groceries and other essential household items for millions of Americans at a time when food price inflation has already soared.
The agency further argued that the loss of competition would lead to lower-quality products and services, while also narrowing consumers’ choices for where to shop for groceries.
For thousands of grocery store workers, the proposed acquisition would also “erase aggressive competition for workers, threatening the ability of employees to secure higher wages, better benefits and improved working conditions,” the agency said.
A bipartisan group of nine attorneys general joined the FTC in asking the court to grant a preliminary injunction blocking the proposed acquisition.
Kroger, Albertsons Defend Deal Amid Competition from Rivals
Defending the planned acquisition, Kroger and Albertsons have said they need to combine in order to compete against larger rivals such as Amazon and Walmart.
The grocery giants have further vowed to spend $500 million to begin lowering prices as soon as the merger is complete along with $1 billion to raise wages and comprehensive benefits for workers and $1.3 billion to improve Albertsons Cos.’ stores.
Additionally, Kroger has said it will sell 579 stores to C&S Wholesale Grocers, a New Hampshire-based competitor, to help address concerns about competition.
Speaking during the Aug. 27 hearing, Albertsons’ lawyer Enu Mainigi said the acquisition falling through could result in layoffs and store closures, with the attorney noting that Walmart is able to sell certain products at a price lower than the grocery store chain can buy them wholesale.
The acquisition with Kroger gives Albertsons the best chance to survive, the lawyer said.
Multiple states including Arizona, California, Illinois, Maryland, Nevada, New Mexico, Oregon, Wyoming, and the District of Columbia are pursuing the case against Kroger and Albertsons alongside the FTC.
The trial is expected to last around three weeks.
The states of Washington and Colorado have also filed their own lawsuits to block the acquisition from moving forward. In July, a Colorado district judge temporarily halted the proposed merger in response to the lawsuit filed by state’s attorney general. Both lawsuits are scheduled to go to trial after the Oregon case.
High food prices continue to remain a key theme in the U.S. presidential race between Democratic Vice President Kamala Harris and Republican former President Donald Trump.
According to the U.S. Department of Agriculture, grocery prices were 1.1% higher in July 2024 than in July 2023 — with prices for all food predicted to increase 2.3% in 2024.
Food prices are expected to increase more slowly than the historical average rate of growth next year, according to the department.
Reuters contributed to this report.