The National Grocers Association lauded the Federal Trade Commission’s decision to challenge the proposed merger of Kroger and Albertsons, Monday, saying it underscores the importance of mitigating the substantial buying power wielded by the nation’s largest supermarket chains.
“Every day, America’s local independent supermarkets face economic challenges due to the influence of massive power buyer chains who use their leverage over suppliers at the expense of smaller rivals in the marketplace,” said Greg Ferrara, NGA president and CEO, in a statement. “NGA appreciates the FTC’s commitment to preserving competition in the grocery sector.”
The FTC sued to block the largest proposed supermarket merger in U.S. history—Kroger’s $24.6 billion acquisition of the Albertsons Companies, Inc.—alleging that the deal is anticompetitive, charging that the proposed deal would eliminate competition between Kroger and Albertsons, leading to higher prices for groceries and other essential household items for millions of Americans.
The FTC issued an administrative complaint and authorized a lawsuit in federal court to block the proposed acquisition pending the Commission’s administrative proceedings. A bipartisan group of nine attorneys general will join the FTC’s federal court complaint.
Kroger responded with the following statement.
“Contrary to the FTC’s statements, blocking Kroger’s merger with Albertsons Companies will actually harm the very people the FTC purports to serve: America’s consumers and workers. Kroger’s business model is to take costs out of the business and invest in lowering prices for customers. Kroger has reduced prices every year since 2003, resulting in $5 billion invested to lower prices and a 5% reduction in gross margin over this period. This business model is immediately applied to merger companies. Kroger has a proven track record of lowering prices so more customers benefit from fresh, affordable food, and our proposed merger with Albertsons will mean even lower prices and more choices for America’s consumers.”
Albertsons Cos. said the move could strengthen the power of its bigger rivals.
“If the Federal Trade Commission is successful in blocking this merger, it would be hurting customers and helping strengthen larger, multi-channel retailers such as Amazon, Walmart and Costco–the very companies the FTC claims to be reining in–by allowing them to continue increasing their growing dominance of the grocery industry. In contrast, Albertsons Cos.’ merger with Kroger will ensure our neighborhood supermarkets can better compete with these mega retailers, all while benefitting our customers, associates, and communities. We are disappointed that the FTC continues to use the same outdated view of the U.S. grocery industry it used 20 years ago, and we look forward to presenting our arguments in Court.”