Posts Tagged “Albertsons”
The U.S. Federal Trade Commission (FTC), charged with promoting consumer rights, sued to block what could be the largest supermarket merger in U.S. history. A merger of Kroger and Albertsons, the FTC said, would lead to higher prices, store closures, and job losses.
The $25-billion deal, announced in November 2022, has seen opposition from the United Food and Commercial Workers Union, as well as multiple senators and attorneys general. The FTC suit is one of the merger’s greatest challenges so far.
“Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today,” said Henry Liu, director of the FTC’s Bureau of Competition, in a public statement.
“Essential grocery store workers would also suffer under this deal, facing the threat of their wages dwindling, benefits diminishing, and their working conditions deteriorating.”
As part of the merger plans, the companies intend to divest 413 stores, eight distribution centers, and five private label brands to C&S Wholesale Grocers. The FTC suit has deemed the measures “inadequate”.
“The combined Kroger and Albertsons would have more leverage to impose subpar terms on union grocery workers that slow improvements to wages, worsen benefits, and potentially degrade working conditions,” an FTC statement said.
Kroger responded Monday, stating it would challenge the suit in court and stand behind the merger. Kroger said it would not negatively impact grocery competition and would result in lower prices for consumers and more investments in employee wages.
In response to an announcement of a merger between national grocery chains, Kroger and Albertsons, the National Grocers Association (NGA) of Washington, D.C. has released the following statement:
“A merger of the nation’s top two grocery chains should raise serious questions about a single supermarket giant gaining unprecedented dominance over the nation’s food supply chain,” said Greg Ferrara, NGA president and CEO.
“A merger would not only put smaller competitors at an unfair disadvantage, but also increase anticompetitive buyer power over grocery suppliers, which ultimately would harm consumers. It is our expectation that this deal will receive rigorous scrutiny from federal antitrust enforcers.”
NGA filed comments in April of this year to the U.S. Department of Justice Antitrust Division and U.S. Federal Trade Commission’s January 18, 2022 Request for Information on Merger Enforcement. NGA issued a White Paper in March of 2021 about the anticompetitive impacts of buyer power on the grocery supply chain.
About NGA
NGA is the national trade association representing the retail and wholesale community grocers that comprise the independent sector of the food distribution industry. An independent retailer is a privately owned or controlled food retail company operating a variety of formats. The independent grocery sector is accountable for about 1.2 percent of the nation’s overall economy and is responsible for generating more than $250 billion in sales, 1.1 million jobs, $39 billion in wages and $36 billion in taxes. NGA members include retail and wholesale grocers located in every congressional district across the country, as well as state grocers’ associations, manufacturers and service suppliers. For more information about NGA, visit www.nationalgrocers.org.
When it comes to “Fresh for Everyone,” Kroger is poised to significantly extend its reach. The Cincinnati-based supermarket chain entered a definitive agreement with Albertsons Cos., Oct. 14, to purchase the Boise, Idaho-based competitor for approximately $24.6 billion.
The merger will expand customer reach and improve proximity to deliver fresh and affordable food to approximately 85 million households with a premier omnichannel experience, according to a release.
Together, Albertsons and Kroger currently employ more than 710,000 associates and operate a total of 4,996 stores, 66 distribution centers, 52 manufacturing plants, 3,972 pharmacies and 2,015 fuel centers. The combination creates a “premier seamless ecosystem” across 48 states and the District of Columbia, providing customers with a “best-in-class shopping experience” across both stores and digital channels, said the release.
Amid a climate of rising food inflation, Kroger said its “long track record of lowering prices” in combination with efficiencies gained from the merger, will help the company to lower prices for customers. Kroger said it expects to reinvest approximately half a billion dollars of cost savings from synergies to reduce prices for customers, as well as invest an incremental $1.3 billion into Albertsons stores to enhance the customer experience.
“We are bringing together two purpose-driven organizations to deliver superior value to customers, associates, communities and shareholders,” said Rodney McMullen, Kroger chairman and CEO, who will continue serving as chairman and CEO of the combined company, in the release. “Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores. This merger advances our commitment to build a more equitable and sustainable food system by expanding our footprint into new geographies to serve more of America with fresh and affordable food and accelerates our position as a more compelling alternative to larger and non-union competitors.
“As a combined entity, we will be better positioned to advance Kroger’s successful go-to-market strategy by providing an incredible seamless shopping experience, expanding Our Brands portfolio, and delivering personalized value and savings,” McMullen continued. “We’ll also be able to further enhance technology and innovation, promote healthier lifestyles, extend our health care and pharmacy network and grow our alternative profit businesses. We believe this transaction will lead to faster and more profitable growth and generate greater returns for our shareholders.”
Albertsons agrees the merger will result in greater access to fresh food across the country.
“At Albertsons Cos., we are guided by an ambition to create customers for life,” said Vivek Sankaran, CEO of Albertsons. “Together with Kroger, our combined iconic banners will be able to provide customers with even more value and greater access to fresh food and essential pharmacy services. Given the similarities in the culture and values at Kroger and Albertsons Cos., I am confident that the combination will also have a positive impact on our associates and the communities we are proud to serve. We look forward to working together with Kroger to capture the compelling opportunities ahead.”
The transaction is expected to close in early 2024, subject to the receipt of required regulatory clearance and other customary closing conditions, including receipt of clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, according to the release.