Several states have been holding listening sessions about the proposed $24.6 billion Kroger, Albertsons merger and how the deal would impact the grocery environment in their area. A recent one in Las Vegas had Federal Trade Commission Chair Lina Kahn in attendance, and what she said raised questions as to whether the merger would ultimately be approved.
According to reporting from Las Vegas CBS affiliate KLAS, Kahn had some reservations about the merger, and used the Albertsons, Safeway deal from 2015 as an example. To satisfy antitrust regulators, 146 Safeway and Albertsons stores were sold to Haggen, which then filed for bankruptcy a few months later.
Kroger and Albertsons recently announced a deal to sell over 400 stores to C&S Wholesale Grocers as part of a store divestiture plan to help win approval for the merger.
“If there’s a merger that is presenting a lot of risk of reducing competition, may even create a monopoly…we need to weigh those risks, and especially given that some of these remedies in the past have failed,” Kahn told KLAS.
“Historically, enforcers sometimes have allowed mergers to go through and accept those promises and commitments,” Kahn continued. “But historically, it’s been very difficult to even enforce them.”
Kroger CEO Rodney McMullen was also in Las Vegas recently to attend the Groceryshop 2023 conference and was asked specifically about the Albertsons, Safeway deal with Haggen.
“One of the things that we did was study the prior case in terms of what was criticized and why. And you had a situation where a company was highly levered,” he told CNBC’s Melissa Repco.
“They went from like 15 stores to 150 stores or so with very little debt. They really didn’t have the management depth across the organization. They immediately had to change names and they raised prices and all of those things.”
Most of those attending the public hearing in Las Vegas were against the Kroger, Albertsons merger going through. One attendee made reference to Walmart and how it is not a conglomerate like the Kroger, Albertsons merger would be. He said the deal would control groceries and pharmacies.
Last week, the United Food and Commercial Workers union expressed deep concerns about the proposed acquisition of 413 Kroger- and Albertsons-owned stores by C&S Wholesale Grocers. The union also cited the Haggen deal.
“Kroger joining with Albertsons will mean lower prices and more choices for more customers in more communities, higher wages, and more industry-leading benefits for associates, securing union jobs and expanded opportunities for farmers and suppliers, all of which ensures competition across the industry," Kroger said in an emailed statement to Supermarket News. "The C&S divestiture plan builds on these commitments by ensuring zero stores will close as a result of the merger, all frontline associates will remain employed, all existing collective bargaining agreements will continue, and associates will continue to receive industry-leading benefits alongside bargained-for wages.
"The divestiture plan will extend a well-capitalized competitor into new geographies, and C&S’s strong operational focus and financial resources will position the divested stores to successfully operate and serve their communities for years to come.”
