Kroger and Albertsons CEOs testify in antitrust case

Kroger CEO Rodney McMullen and Albertsons CEO Vivek Sankaran took the stand in the U.S. District Court in Portland, Ore., Wednesday to defend their $24.6 billion plan to merge the two grocery companies. 

McMullen said the merger would enable the combined companies to lower prices for consumers and that it would bring corporate jobs to Portland, according to a story in the Oregonian newspaper.

The case, filed in February by the Federal Trade Commission and nine attorneys general, is being heard by U.S. District Court Judge Adrienne Nelson.  

McMullen said Kroger has been “very impressed” with the company Sankaran has built, according to the Oregonian. “Albertsons does some things better than Kroger that we can always learn from,” McMullen said.

Reports of Sankaran’s testimony in Wednesday’s hearing were not available by press time. 

The trial, which began on Aug. 26, has already made big headlines with the FTC reportedly accusing Kroger of price gouging on products like eggs and milk. Last week, the FTC submitted to the court an email from Kroger Senior Director of Pricing Andy Groff revealing that the grocer has raised egg and milk prices substantially higher than the rate of inflation.

Kroger has denied that the cost increases constitute price gouging, saying in an email to Supermarket News that the FTC “cherry-picked” the email and is not representative of the company’s overall strategy of cutting prices for its customers. 

“What’s missing is the fact that Kroger’s retail prices include the cost to run a grocery store, including labor, transportation, advertising, and other costs. Many of these costs have significantly increased since 2020. Kroger’s pricing decisions are impacted by factors beyond inflation,” a Kroger spokesperson said last week.

The FTC has also argued that the two grocers, which are the two largest pure-play  supermarket companies in the nation, consider each other their biggest competitors. Albertsons and Kroger have both downplayed this notion, arguing that larger players in grocery like Walmart, Amazon, and Costco are their real competitors. 

The Oregonian newspaper reported that on the second day of the trial, the FTC revealed an email exchange from 2022, where Todd Kammeyer, president of Kroger-owned banner Fred Meyer, voiced his concern with a plan to drop circulars because Albertsons continued to distribute them. 

“They are our biggest competitors, with 300-plus stores,” Kammeyer wrote in the email.

The FTC has also argued that the acquisition would also harm the more than 700,000 union workers at the two stores that often leverage the two grocers against one another in collective bargaining. 

Thousands of Fred Meyer grocery and meat department workers in Portland went on strike on Aug. 28 over stalled contract negotiations and accusations that the grocer engaged in unfair labor practices due to its unwillingness to increase pension funding during the negotiations. 

The United Food and Commercial Workers Local 555 strike ended on Sept. 3, with the union calling the action “a win for our membership.”

“Fred Meyer was held accountable, and the company now understands just how many of its workers are committed to change,” Miles Eshaia, UFCW Local 555 communications coordinator, said in a press release. “We’re returning to the table next week. We demand the employer take these negotiations seriously and follow Federal Labor Law.”

Union President Dan Clay also cited recent developments from the FTC case, calling on Fred Meyer to “work within the law, take care of their employees, and stop price gouging our communities.”

Contract negotiations are ongoing and expected to resume near the end of the trial on Sept. 11 and 12, the union said. 

Meanwhile, the FTC is following up on accusations made prior to the trial that Albertsons executives destroyed evidence following the announcement in 2022 that it aimed to merge with Kroger. 

Following the announcement that Kroger intended to purchase Albertsons, the FTC directed both companies to “cease all document destruction activities with respect to matters that may be of relevance to this investigation…” according to a court document filed on Aug. 16. 

The FTC accused four Albertsons executives of destroying text messages discussing the proposal, including Albertsons’ CEO Vivek Sankaran, Colorado Division President Todd Broderick, Pacific Northwest Division President Carl Huntington, and VP of Customer and Market Intelligence Lisa Kinney.

On Tuesday, Broderick said he might have deleted the texts but did not do so intentionally, according to a story in the Oregonian. The text conversation in question between Broderick and Albertsons Senior Director of Human Resources Scott Shores, focused on whether the acquisition would lead to price increases. 

The text conversation only included comments from Shores, while Broderick’s comments had been deleted, the FTC argued. Shores said in the text conversation there appeared to be bipartisan opposition to the merger and that “we all know prices will not go down.”