CSPI demands block on US$24.6B Kroger and Albertsons merger

17 May 2023 --- The Center for Science in the Public Interest (CSPI) is calling on the Federal Trade Commission to block the merger of the US’ top two grocery chains, Kroger and Albertsons.

The nonprofit nutrition and food safety watchdog group says the proposed merger would result in fewer grocery stores and higher prices – negatively impacting food and nutrition security for consumers in the US. 

The Kroger-Albertsons merger would combine the two largest US supermarket chains, resulting in an entity controlling 22% of the retail food market and making it the nation’s second-largest food retailer. 

Post-merger, the combined companies plus the largest food retailer, Walmart, would control 55% of the food retail market.

In a public statement to the Cincinnati Enquirer,  Kroger CEO Rodney McMullen and Albertson’s CEO Vivek Sankaran said the companies remain grounded in serving customers. 

“Our collective grocery retail experience teaches us that customers’ needs are always changing. It’s our responsibility to anticipate those changes and provide what’s most important to them,” they state. 

“Customers also fulfill their food cravings almost anywhere − from dollar and convenience stores to independent grocers, to larger retailers and on e-commerce platforms and America spends about half of its food budgets in restaurants.”

The duo also say they believe the landscape is competitive and ever-evolving, and that they  aim to deliver lower prices and more choices faster. “Since we announced the merger, we have seen many misconceptions about it. We would like to correct a few of these and share the meaningful, measurable benefits the merger will bring to customers, associates and communities,” they assert.

Food retail market 
Research shows that grocery mergers in highly concentrated markets are associated with higher food prices. Consolidation in the grocery industry is also associated with fewer grocery stores. If the merger is approved, Kroger and Albertsons admit they’ll have to divest between 100 and 375 grocery stores. 

The merger of the top two grocers would reduce food access by raising prices and shuttering stores.The CSPI also said it was joining the “Stop the Merger” coalition, a national and state-level effort to oppose the deal between Kroger and Albertsons and backed by more than 100 organizations.

Last week, the United Food and Commercial Workers International Union and its 1.3 million members voted unanimously to reject the Kroger-Albertsons merger.

Higher food prices 
In addition to outlining its concerns in a letter to members of the FTC, CSPI stated that it was formally joining the Stop the Merger coalition, led by local chapters of the United Food and Commercial Workers and other labor and economic justice organizations concerned with job losses, higher food prices, and negative impacts on farmers and suppliers resulting from the merger. 

“Food prices are higher than ever before, and forty million Americans live in areas with low incomes and limited access to healthy, affordable food,” says CSPI president Dr. Peter Lurie. 

“The proposed merger of Kroger and Albertsons will likely mean higher prices, fewer stores, and less competition. It might be a good move for executives and shareholders, but the merger would be an economic blow to Americans, especially those whose jobs would be lost post-merger.” 

CSPI has long been concerned with anti-competitive practices in the grocery industry. In 2021, CSPI asked the FTC to use its authority under Section 6(b) of the FTC Act to investigate food retailer and manufacturer marketing practices, including slotting fees and “category captain” arrangements. 

According to CSPI, the proposed merger would only exacerbate the anti-competitive nature of those practices as the combined company’s buying power grows bigger. 

Since then, CSPI filed a public comment on how supply chain disruptions have further exacerbated the previously identified threats to competition and consumer choice in the retail food marketplace. 

In November of 2021, the FTC ordered nine major retailers, manufacturers and wholesalers, including Kroger, to provide internal documents as part of its broader investigation into how supply chain disruptions impact competition. 

By Elizabeth Green