The planned $20 billion merger between Kroger and Albertsons was blocked by a federal judge who “agreed with the Federal Trade Commission’s argument that Kroger would become the dominant player in traditional supermarkets if allowed to add nearly 2,000 stores by taking over Albertsons,” report Dave Michaels and Patrick Thomas of The Wall Street Journal.
U.S. District Judge Adrienne Nelson “rejected the companies’ counterargument that selling 579 stores to C&S Wholesale Grocers would replace the lost competition.”
[Kroger has the largest free-standing grocery store in Hopkinsville.]
The ruling is a victory for FTC Chair Lina Khan, “who has waged legal battles to stop megadeals rather than accept companies’ proposed fixes to address competition concerns,” Michaels and Thomas write. Kroger and Albertsons executives marketed the deal as a necessary move to compete with Walmart and Amazon.
Nelson’s ruling cited the fierce “head-to-head competition” between Kroger and Albertsons, which the proposed merger “would have removed.” Michaels and Thomas write, “An FTC spokesman said the ruling ‘protects competition in the grocery market, which will prevent prices from rising even more.'”
If the deal had succeeded, Kroger’s store count would have almost doubled, “exceeding the scale of Walmart’s 3,500 supercenters,” Michaels and Thomas add. “Rodney McMullen, Kroger’s longtime chief executive, had pledged to eventually invest $1 billion annually in lowering prices at the acquired Albertsons stores. … FTC attorneys argued the deal would only give Kroger a reason to increase prices by removing a competitor.”
Earlier in the year, Albertsons CEO Vivek Sankaran told a federal court that “if Albertsons’s sale to Kroger was blocked, the supermarket chain would consider closing stores or laying off workers,” the Journal reports. “He said that while the company’s business is sound for now, in the next two to three years it could need to find another buyer.”
The Rural Blog is a publication of the Institute for Rural Journalism and Community Issues based at the University of Kentucky.
