The Center for Science in the Public Interest (CSPI) has filed its objections to the proposed $24.6 billion acquisition of Albertsons by Kroger, saying that it "would dramatically decrease competition within an already consolidated food retail market, which would result in fewer grocery stores and higher food prices, negatively impacting food and nutrition security for consumers across the country. Additionally, the proposed merger would substantially increase Kroger-Albertsons' buying power, worsening anticompetitive retailer marketing practices to the detriment of smaller suppliers and consumers."
The letter to FTC chair Lina Khan argues that "post-merger, two firms would control over 55% of the national food retail market that includes supermarkets, grocery stores, warehouse clubs, and supercenters (Walmart and Kroger-Albertsons) … The proposed merger would continue the trend of concentration in the food retail market; over the past three decades, national market concentration, measured by the Herfindahl-Hirschman Index, has increased by 458 percent and county-level market concentration has increased by 94 percent … The merger would reduce competition in numerous states, increasing anticompetitive concentration in local markets … Kroger and Albertsons acknowledged local market competition concerns by proposing to divest 100–375 stores … However, divestitures as conditions of previous grocery mergers have proven unsuccessful solutions to local market concentration, leading to companies buying back stores and store closures."
The letter also argues that a merger would reduce the access that some US communities - especially poor, Black and Latino neighborhoods - have to healthy food, and concludes that "the proposed merger is likely to harm consumers through an anticompetitive food retail market with fewer stores, higher food prices, and consolidated food manufacturer and processor control, ultimately reducing healthy food access. We urge the FTC to seek to enjoin this merger."
You can read the full CSPI letter here.
- KC's View:
The opposite argument by Kroger and Albertsons is that CSPI's logic is flawed, that the deal is good for consumers and will result in lower prices and great accessibility to healthy food. And, no doubt, CSPI will be described by some as the "food police," dedicated to actually reducing choice by being dogmatic about nutrition issues.
We've got another 6-9 months of this stuff, at least. I have no idea how it will turn out, but I won't be surprised if the FTC tries to block the merger and that Kroger and Albertsons respond by going to court.