Sen. Bernie Sanders is among those calling on the Biden administration to block the proposed merger between erstwhile rival grocery giants Kroger and Albertsons, which was formally announced Friday morning.
“At a time when food prices are soaring as a result of corporate greed, it would be an absolute disaster to allow Kroger, the second-largest grocery store in America, to merge with Albertsons, the fourth-largest grocery store in America,” Sanders (I-Vt.) tweeted Thursday night, before an agreement had been reached. “The Biden administration must reject this deal.”
Under the terms of the merger, Kroger agreed to buy Albertsons for a grand total of $24.6 billion. The price tag includes the purchase of Albertsons stock at $34.10 per share and the assumption of approximately $4.7 billion of the company’s debt. As part of the transaction, Albertsons will pay its shareholders a special cash dividend of up to $4 billion next month.
Cincinnati-based Kroger trails only Walmart in grocery market share, while Boise-based Albertsons is behind Costco. As a result of Friday’s acquisition, the new conglomerate is expected to control nearly 16% of the market—closing the gap on Walmart, which commands 21% of the market—and be valued at almost $50 billion.
Together, Kroger and Albertsons, including their numerous subsidiaries, employ more than 710,000 workers at roughly 5,000 stores across 48 states plus Washington, D.C., and bring in $208 billion in annual revenue, just behind Walmart’s $218 billion.
Sanders is far from alone in urging the Federal Trade Commission (FTC) to nix the deal, with progressives arguing that it would hurt workers and force consumers to put up with even more corporate price gouging, which has escalated following years of supermarket consolidation.
“The federal government’s own analysis finds that supermarket consolidation typically leads to price hikes,” Mitch Jones, managing director of policy at Food & Water Watch, said Thursday. “For the sake of everyday consumers, farmers, and food workers, the Biden administration should be rejecting this terrible, greed-driven proposal out of hand.”
Although consolidation in the grocery sector has, according to the American Economic Liberties Project (AELP), “previously been mismanaged by antitrust enforcers,” regulatory approval of Kroger’s buyout of Albertsons—the largest supermarket deal since Supervalu, CVS Corp., and a group of investment firms bought Albertsons for $9.7 billion in 2006—is far from guaranteed.
Federal officials, including FTC Chair Lina Khan and Jonathan Kanter, assistant attorney general of the U.S. Department of Justice’s Antitrust Division, have both taken a more hard-nosed approach to mergers following decades of lax enforcement.
“The actual practicality of achieving regulatory approval by the FTC could be difficult,” according to Jennifer Bartashus, an analyst at Bloomberg Intelligence. “If you think about the store bases of the two respective entities, there is a lot of overlap in very competitive markets.”
AELP executive director Sarah Miller said Thursday that “there is no reason to allow two of the biggest supermarket chains in the country to merge—especially with food prices already soaring.”
Consumer Price Index data released Thursday morning showed that food prices continued to climb last month. Over the past year, the price of eggs, chicken, milk, and bread has increased by 30.5%, 17.2%, 15.2%, and 14.7%, respectively.
Progressive economists have attributed above-average price increases for certain products to decades of consolidation. Allowing a handful of corporations to control a greater share of the market, they argue, enables executives to hike prices and inflate profits.
“With food prices rising, the last thing Americans need is a supermarket merger that will spike food prices even further,” Public Citizen president Robert Weissman said Friday. “Rejecting this merger proposal should be a no-brainer for federal antitrust officials.”
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Kenny Stancil is a staff writer for Common Dreams. Follow him on Twitter: @kenny_stancil.
