A proposed merger between The Kroger Co., the number one supermarket chain, and Albertsons Cos Inc. would combine two of the largest grocers in the United States, but many Senators have serious concerns about the proposed business deal. The $25 billion dollar deal is expected to be complete in 2024.
Opposition from progressive lawmakers, such as Sen. Elizabeth Warren (D-Mass.) and Sen. Bernie Sanders (I-Vt.), are calling on regulators to reject the deal.
“More mergers and less competition would mean even higher prices—and layoffs for employees,” Warren said.
The Senate Judiciary’s antitrust subcommittee “announced Tuesday that it will hold a hearing next month to scrutinize the merger,” CNN Business reported.
“We have serious concerns about the proposed transaction between Kroger and Albertsons,” Senators Amy Klobuchar of Minnesota and Mike Lee of Utah said in a joint statement. “We will hold a hearing focused on this proposed merger and the consequences consumers may face if this deal moves forward.”
According to a press release, a merger between Kroger, which owns 24 grocery chains, such as Ralphs, Dillons and Food 4 Less, and Albertsons, which also owns 24 chains, including Safeway, Vons and Shaw’s, would help them compete with Walmart, Amazon and Costco. Kroger and Albertsons said the merger will allow the grocers to “use $500 million in cost savings from the deal to reduce prices for shoppers and tailor promotions and saving” and “they also said they will invest $1.3 billion in Albertsons, which would include lowering prices,” CNN Business reported.
“We have serious concerns about the proposed transaction between Kroger and Albertsons,” Senators Amy Klobuchar of Minnesota and Mike Lee of Utah said. “We will hold a hearing focused on this proposed merger and the consequences consumers may face if this deal moves forward.”
Opposition to the merger said it “raises considerable antitrust concerns.”
But Kroger, which runs 2,726 stores and Albertsons, which owns 2,278 stores nationwide, said it will divest stores as needed in areas where there is overlap.
“We are bringing together two purpose-driven organizations to deliver superior value to customers, associates, communities and shareholders,” Rodney McMullen, Kroger chairman and CEO, said.
Others opponents of the merger contested that it would “drive out rival smaller grocers and independent stores, squeeze suppliers, and set off a vicious cycle of consolidation among supermarkets and suppliers, further entrenching the problem,” CNN Business reported.
“Even though every merging company says, ‘This merger is going to reduce price costs,’ it just doesn’t manifest in actual pocketbook saving for consumers,” Christine Bartholomew, a University at Buffalo law professor and antitrust scholar, said.
Since the food industry is concentrated among the top five grocers—Walmart, Kroger, Amazon, Albertsons and Ahold Delhaize, according to the National Grocers Association—the consensus is that merging two of the largest supermarket chains will further increase food prices, which are already at an all-time high.
“There is no reason to allow two of the biggest supermarket chains in the country to merge — especially with food prices already soaring,” Sarah Miller, executive director of the American Economic Liberties Project, said. “With 60 percent of grocery sales concentrated among just five national chains, a Kroger-Albertsons deal would squeeze consumers already struggling to afford food, crush workers fighting for fair wages, and destroy independent, community stores.”