FTC Sues to Block Grocery Store Merger That Could Have HUGE Impact on Louisiana, Texas

HOUSTON, Texas (KPEL News) - There are 35 Kroger stores in Houston, Texas. Overall, there are stores in 84 cities in Texas. It's also located in five cities in neighboring Louisiana. All of these stores are anticipated to be impacted in some way by an upcoming merger between the grocery giant and one of its competitors, Albertsons.

Some 400 stores will be divested - sold to C&S Wholesale Grocers - as part of an agreement to make the merger acceptable to the Federal Trade Commission (FTC), a U.S. agency focused on enforcing "consumer protection laws that prevent fraud, deception and unfair business practices," its website says.

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But the FTC is suing to block the merger, making its move on Monday morning.

“This supermarket megamerger comes as American consumers have seen the cost of groceries rise steadily over the past few years,” said the director of the FTC’s Bureau of Competition, Henry Liu. “Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today.”

More via the Wall Street Journal:

The FTC’s challenge comes as the portion of Americans’ income spent on food has reached a three-decade high, despite inflation easing for many other goods. President Biden, who is running for re-election, took aim at large grocery chains in January over high food prices, saying that stores are gouging shoppers and bringing in excess profits.

Kroger and Albertsons are the largest and second-largest U.S. supermarket operators in terms of sales. Based in Cincinnati, Kroger operates more than 2,700 grocery stores, including its namesake locations and regional chains such as Fred Meyer and Ralph’s. Albertsons runs nearly 2,300 supermarkets across the U.S., including the chain Safeway.
The two companies operate in many of the same areas, including Colorado, Southern California, Washington, Texas and Chicago.

It was widely expected that the FTC would be pushing back against the deal, with U.S. Senator Elizabeth Warren (D-Mass.) being one of the loudest voices against it.

The FTC has been busy in recent years with multiple mergers across multiple industries. The government agency has been fighting mergers in both the airline and tech industries, as well as others.

The suit sets up another battle for U.S. antitrust enforcers. Under the Biden administration, the FTC and the Justice Department have challenged megadeals ranging from Microsoft’s bid for Activision Blizzard to JetBlue’s attempted takeover of Spirit Airlines. 

Both companies have said they will be more than willing to defend their case in court.

"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 said in a statement on Monday. "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."

The company added that "The FTC’s decision makes it more likely that America’s consumers will see higher food prices and fewer grocery stores at a time when communities across the country are already facing high inflation and food deserts."

"In fact, this decision only strengthens larger, non-unionized retailers like Walmart, Costco and Amazon by allowing them to further increase their overwhelming and growing dominance of the grocery industry," Kroger's statement concluded.

According to the Wall Street Journal, attorneys general in Washington and Colorado "have already sued to stop the merger," adding that "Nine states including California joined the FTC’s case on Monday."

The grocery store giants have already said that consumers can expect lower prices in the wake of the merger.

READ MORE: Here’s What Shoppers in Louisiana and Texas Need to Know About This Major Grocery Merger

The FTC action will delay the merger, which could have an impact on consumers across the country, including in Texas and Louisiana.

The proposed divestiture and lowering prices will impact communities where Kroger and Albertsons stores are currently located. The FTC's legal action puts those plans on hold, which may also have an economic impact.