Government attorneys disagree on the grocery market definition and the impact the deal would have on competition.
The Federal Trade Commission and attorneys general from eight states and the District of Columbia continue to press their lawsuit to block the proposed Kroger-Albertsons “big grocery” merger, but four other state attorneys general have come out in support of the deal.
With one exception, the 13 attorneys general broke along party lines, with eight Democratic AGs and one Republican siding with the FTC to oppose the deal. Joining the FTC are attorneys general from Arizona, California, Illinois, Maryland, Nevada, New Mexico, Oregon, Wyoming, and the District of Columbia. Wyoming is the only one with a Republican AG. All four AG’s who think the merger is good for competition are Republicans. AGs of Washington State and Colorado, meanwhile, who filed separate suits alleging the merger violates their respective antitrust laws, are Democrats.
Read Tim LaComb’s previous post on the merger.
The FTC and the AGs filed their complaint in U.S. District Court for the District of Oregon in February 2024, seeking to enjoin the proposed $24.6 billion deal as anticompetitive and certain to trigger higher consumer prices.
The FTC and its co-plaintiffs note that Kroger’s $25 billion acquisition of Albertsons would be the largest supermarket deal in history. “The companies’ combined footprint would encompass approximately 5,000 stores and 700,000 employees in 48 states and increase Kroger’s market shares to presumptively unlawful levels in hundreds of markets across the country,” the suit maintains.
In a surprising move, though, AGs from Ohio, Alabama, Georgia, and Iowa followed with an amicus curiae brief opposing the requested preliminary injunction.
The four AGs dispute the FTC’s analysis of the relevant market. Shoppers have a wider range of options than just supermarkets, as the FTC would have everyone believe, they say. They also criticize the FTC’s objections to the parties’ proposed divestiture plan, arguing that it meets the agency’s historical standards. Contrary to the FTC suit, the four AGs say the deal would be good for competition in the grocery market.
“The Commission’s Complaint …,” the four write in their amicus brief, “imagines a retail landscape in which consumers have no practical alternatives to supermarkets as their source for retail groceries and alleges that supermarkets, which it defines to include supercenters like Walmart, constitute a separate relevant market for antitrust analysis. Since Kroger and Albertsons are both supermarkets, the acquisition, under this logic, violates Section 7 of the Clayton Act …”
“Common sense and market evidence,” the four AGs continue, “conclusively refute the Commission’s simplistic vision of the retail grocery market, and blocking the acquisition would weaken, not protect, competition among firms vying for consumer grocery purchases. Compounding the error of a false market definition, the Commission refuses even to entertain the parties’ plan to preserve competition by divesting stores in geographic markets where they now have overlapping retail operations.”
Grocery prices are also playing a role in the current presidential election. Democratic candidate, Vice President Kamala Harris, has declared she will fight “price gouging” at food stores. Republican candidate, former president Donald Trump, countered that Vice President Harris intends to enact “Soviet style price controls.”
NPR recently reported on a hearing in the FTC case in Oregon, which brought to light a March 2024 email by a Kroger executive, in which he reportedly wrote that the chain’s milk and egg prices were “significantly higher” than needed to account for inflation. Kroger’s attorneys later said the email was “cherry-picked” and that the text of the correspondence didn’t represent its pricing strategy, NPR reported.