A federal judge and a Washington state court recently blocked the US$25 billion merger between supermarket chains Kroger and Albertsons. The ruling follows concerns from the Federal Trade Commission (FTC) and union representatives that the merger would hurt consumers and workers.
The FTC argues that combining the two companies would reduce competition, leading to higher prices and fewer choices. If the merger had been allowed, the combined company would have become the second-largest grocery chain in the United States, controlling 22 percent of the grocery market, according to the organization Food and Water Watch.
“This historic win protects millions of Americans across the country from higher prices for essential groceries—from milk, to bread, to eggs—ultimately allowing consumers to keep more money in their pockets,” says FTC Bureau of Competition Director Henry Liu. “This victory has a direct, tangible impact on the lives of millions of Americans.”
“This kind of merger activity is actually one of the things that can create new geographies of food apartheid,” Aaron Johnson, Policy Co-Director at the Rural Advancement Foundation International Unites States of America (RAFI-USA), tells Food Tank. “As more and more of the grocery landscape is controlled by fewer and fewer grocery barons, they are not operating grocery stores to equitably feed communities.”
The Grocery Gap Atlas, a tool developed by RAFI-USA and the Open Spatial Lab at the University of Chicago, shows the merger would have resulted in significant increases in market concentration, with Kroger potentially controlling over half of the grocery market in states like Colorado and Washington.
“The Grocery Gap Atlas really visualizes the reason why this type of concentration is a major problem, especially for rural areas,” Johnson explains. “What we found in that work is that there’s a correlation between corporate concentration and food apartheid.”
“This type of concentration also really hollows out the ability of regional food systems to support small and mid-sized farmers and the ability for small, independent grocery stores or smaller regional chains to serve areas that the largest corporate grocery chains are not interested in serving,” Johnson adds.
Food prices have steadily risen over the past few years, with more and more families struggling to afford basics like milk, eggs, and bread, according to Food & Water Watch. From January 2020 to January 2024, the cost of groceries for a typical family of four increased by 50 percent. In the same period, large grocery chain profits grew between 9 and 36 percent.
Kroger officials described competition from Amazon and Walmart as an existential threat but authorized a US$7.5 billion stock buyback shortly after the merger’s failure—almost ten times the amount promised for investments in lower prices had the merger gone through. United Food and Commercial Workers International Union (UFCW) union leaders argue that this decision underscores misplaced priorities and mismanagement of funds that could have been used to build hundreds of new stores, reduce prices, or improve wages and staffing.
In addition to the US$800 million they had promised to invest in lowering prices, Kroger proposed selling off some of its stores to maintain competition. But U.S. District Judge Adrienne Nelson ruled that this would not be enough to protect consumers, stating that the merger would eliminate important competition between the two companies.
According to the UFCW, which represents grocery store employees, the merger would also put workers’ wages, benefits, and job security at risk.
“While in the consumer context a more highly concentrated market would result in fewer stores competing to sell a product, in the labor context a more highly concentrated market would result in fewer employers competing for workers,” Judge Nelson wrote in her opinion.
Following Nelson’s ruling blocking the merger, UFCW President Marc Perrone stated, “We are pleased that the court heard the concerns voiced by our hard-working members and rejected the proposed megamerger between Kroger and Albertsons.”
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Photo courtesy of Rithika Gopal, Unsplash
