Why Merge-to-Compete Arguments Are Contrary to the Letter and Spirit of Antitrust Laws and How Resulting Mergers Have Harmed the Public
A seemingly never-ending parade of corporations has attempted to justify illegal mergers by claiming the need to combine forces in order to successfully compete with other giant corporations. Kroger and Albertsons, the largest and second-largest traditional supermarket chains in the United States, are two of the most recent corporations to invoke this tired playbook by arguing that a merger would give them “the best opportunity to successfully compete with the non-union behemoths — Walmart, Costco, and Amazon — that have come to dominate the retail grocery industry, both in stores and online.” They say these behemoths are “a threat to the very existence of the corner grocery store.”
One effect of this argument is to distort public discourse surrounding harmful mergers. Oftentimes, monopolists deploy a public relations strategy that focuses on national market shares and statistics to argue that they need to “merge to compete.” Media outlets sometimes repeat this argument without considering where competition actually happens. Kroger and Albertsons made much of the fact that their combined national share of the grocery market was smaller than that of Walmart—a misleading and largely irrelevant statistic given the hyper-local nature of grocery competition. Indeed, Kroger and Albertsons each already have higher market shares than Walmart in many local markets.
But even when taken at face value, the “merge to compete” argument fails to hold up to reality and legality. Fortunately, a federal judge in Oregon and a state court judge in Washington both saw through this meritless argument en route to granting injunctions to halt the proposed merger between Kroger and Albertsons. This brief outlines why “merge to compete” arguments are bogus, with examples of consummated mergers of giant corporate competitors that promised to increase competition but instead had the opposite effect, with disastrous consequences for competition, consumers, workers, and the public.
Other courts should follow the lead of these judges in rejecting “merge to compete” arguments as contrary to the letter and the spirit of the antitrust laws.