Two of the nation's largest grocery chains are planning to merge. Kroger said it plans to buy Albertsons, and if the deal goes through, it would create the second-largest grocer by market share in the country behind behemoth Walmart.
The deal, which is expected to close in 2024, is valued at $24.6 billion. It would create a company that had a combined 710,000 employees at nearly 5,000 stores, many of which are unionized, a rarity in the grocery industry. It would be the U.S.'s largest supermarket chain and be poised to better compete with Walmart and Amazon.
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Combined, the companies would operate stores in 48 states and the District of Columbia. Chains owned by Kroger, which is the largest supermarket operator in the country by sales, include Ralphs, Harris Teeter, Fred Meyer, King Sooper, and several others. Albertsons is right behind Kroger in size and features Safeway, Vons, Jewel-Osco, and Shaw's, among its 20 chains.
Shareholders of the companies are thrilled, but a mega grocery merger may not be great news for shoppers who are bearing the brunt of record inflation and food prices. It would mean less competition in some areas of the country, and antitrust regulators in the Biden Administration are likely to take notice.
To appease regulators, part of the proposed merger includes spinning off 100 to 375 stores into its own separate entity to gain antitrust clearance. That standalone public company, dubbed SpinCo, would likely consist of stores in the Western U.S., where there's more overlap between stores currently run by Kroger and Albertsons.
At a time when food prices are soaring as a result of corporate greed, it would be an absolute disaster to allow Kroger, the 2nd largest grocery store in America, to merge with Albertsons, the 4th largest grocery store in America. The Biden Administration must reject this deal.
— Bernie Sanders (@SenSanders) October 14, 2022
Even with that measure — and despite Kroger saying that it plans to reinvest a half billion dollars into lowering prices for customers — analysts and consumer watchdogs were quick to criticize the merger, and many aren't sure it can get past antitrust scrutiny. The deal "would squeeze consumers already struggling to afford food, crush workers fighting for fair wages, and destroy independent community stores," according to Sarah Miller, executive director of the American Economic Liberties Project, a nonprofit antitrust advocacy organization. "This merger is a cut-and-dry case of monopoly power, and enforcers should block it.”
