Portland, OR — Following opening arguments in the Federal Trade Commission v. Kroger-Albertsons hearing in the U.S. District Court for the District of Oregon, where the Federal Trade Commission (FTC) and nine State Attorneys General are seeking a preliminary injunction to hit “pause” on the biggest supermarket merger in history, the American Economic Liberties Project released the following statement.

“The FTC’s opening argument previewed concrete evidence that a Kroger-Albertsons merger would lead to higher prices for millions of Americans and worse working conditions for hundreds of thousands of workers,” said Laurel Kilgour, Research Manager at the American Economic Liberties Project, who attended the hearing in Portland yesterday. “By contrast, lawyers for Kroger and Albertsons touted fake promises of utopian outcomes that are not legally enforceable. Indeed, Albertsons has a track record of profiting from similar fake promises that turned out disastrously for competition and for communities, and this time is no different; token divestitures of a fraction of stores to inexperienced grocery operators did not preserve competition then and that sham tactic is destined to fail again here. We encourage the court to reject the false urgency concocted by the defendants’ lawyers, and hit ‘pause’ long enough for this ill-conceived deal to be more thoroughly scrutinized through administrative proceedings as Congress intended.”

“Given that thousands of communities depend almost exclusively on their local Kroger and Albertsons stores for everyday essentials, the idea that they must merge to compete more vigorously for food dollars falls flat,” added Kilgour. “At a time when working families are especially concerned with costs and access to food, we need more—not less—competition between grocery stores on prices, wages, the freshness of produce, and service quality.”

Key points from opening arguments in the hearing, which took place in Portland, Oregon, include:

• There is currently robust head-to-head competition between Kroger and Albertsons across multiple lines of commerce.
• A merger between Kroger and Albertsons would increase market concentration in thousands of communities across the country, and the loss of competition in any single geographic market is sufficient to meet the Federal Trade Commission’s burden of proof.
• The FTC flagged harms in a variety of locations where Kroger and Albertsons currently compete. To take just one example, in Santa Fe, New Mexico, Albertsons has a 37% market share, while Kroger has a 22% market share. Post-merger, that market share would jump to 59%, and the combined entity would own five out of eight options in the area. Kroger has not proposed the divestiture of any stores in Santa Fe to off-set this clear loss of competition. That’s true in other communities as well, like Corvallis, Oregon, where Kroger and Albertsons control 60% of the market
• The two corporations view each other as a primary competitor.
  • Kroger invests millions of dollars in at least two types of pricing strategies that have the effect of reducing their price below Albertsons prices – pricing parity (i.e., charging the lowest price), and the high-price retail rule (HPR).
    • Kroger’s high-price retail (HPR) rule uses low-cost retailers like Walmart to set a price floor, then targets a range of prices up to a ceiling set by Kroger’s highest price retail competitor, often Albertsons. This “price ceiling” model is further proof that Kroger views traditional supermarkets, like those operated by Albertsons, as their primary competitor. In response, Albertsons often lowers its price ceiling to prevent Kroger from under-cutting it on price.
  • Albertsons’ pricing tool makes price recommendations based on “a primary food competitor”– which in many markets, is usually a Kroger store.
• The corporations also compete as employers. Both have unionized workforces which depend on being able to play employers off each other through credible threats that they will go on strike in order to win higher wages and safer, better working conditions. With fewer employers in the labor market, unions would lose that leverage.

Background: 

In October 2022, grocery giant Kroger entered into an agreement to acquire its rival Albertsons for $24.6 billion. The deal would be the largest grocery acquisition in history, combining two mega-chains that have already consolidated much of the industry. Kroger owns Ralphs, Fred Meyer, and Harris Teeter. Albertsons owns Safeway, Vons, Jewel-Osco, and Star Market. In bringing these brands and many others under the same roof, Kroger would create a behemoth with 5,000 stores, 4,000 pharmacies, and 700,000 employees across 48 states.

The Federal Trade Commission voted unanimously to block the merger in February 2024, finding it would lead to higher grocery prices and reduce workers’ bargaining power in communities across the country. With high grocery prices top of mind for American families, and increasingly linked to consolidation in the food system, the merger challenge received a remarkable outpouring of public support. And not just from consumers—supermarket consolidation has been devastating for workers, independent grocers, and farmers, all of whom applauded the FTC for taking action. Members of Congress from both parties added to the chorus, while two states, Colorado and Washington, filed additional suits to block the merger.

Read “Supermarket Squeeze: The Real Costs of the Kroger-Albertsons Deal” to learn more.

Read Economic Liberties’ Myth/Fact on the Kroger-Albertsons Merger here.

Read about other ways to stop domination by corporate giants in food markets and beyond here.

Learn more about Economic Liberties here.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.