Regulators sue to block the $25B Kroger-Albertsons merger, brushing off recent antitrust L’s

Problems at checkout… The FTC and nine US states sued to block Kroger and Albertsons from joining in what would be the largest supermarket merger in American history, saying it would hurt competition. The $25B deal between the country’s two largest supermarket chains would create a $200B grocery colossus with 720K employees.

• Double-bagged: Regulators say the deal could reduce consumers’ choices and lower workers’ wages. Many of Kroger and Albertsons’ 5K combined stores are relatively close to one another, which could create local monopolies.

• Grocery megazord: Since the deal was announced in 2022, execs of both companies have argued that merging is necessary to compete with larger retailers like Walmart, Amazon, and Costco.

• Take your receipt: The share of US income spent on food (11.3%) is at a three-decade high. Supermarket prices are up 25% from prepandemic, compared to inflation’s 19% climb in that period. Critics of the merger worry it could further raise prices.

Antitrust’s supermarket sweep… Given the Biden admin’s tough antitrust stance, the FTC’s suit against Kroger and Albertsons has been expected for months. In 2022, the FTC and DOJ brought the highest # of antitrust challenges since pre-merger reviews became required in 1976. The FTC’s’ “you miss 100% of the shots you don’t take” mentality has led to major wins (like: JetBlue’s blocked purchase of Spirit, Illumina reversing its Grail acquisition); it’s also led to big L’s (think: Microsoft’s Activision Blizzard deal going through).