This Mega-Merger Will Raise Grocery Prices. Biden Can Stop It.
The Biden administration is set to issue a ruling this month on the proposed Kroger-Albertsons merger that will impact millions of shoppers and workers.
By Josh Miller-Lewis, More Perfect Union
Grocery prices are out of control and something needs to change.
That was the refrain we heard reiterated across the country this fall at town halls attended by Lina Khan, chair of the Federal Trade Commission.
“Prices are through the roof and at work every day I hear people talking about how they can't afford groceries, how they can't afford to put diapers on their child,” one working-class Las Vegas resident said at a forum in Nevada.
"I'm a father of six. I'm concerned about our milk prices, eggs,” another parent shared at a separate Nevada event. “I already have a problem feeding my kids.”
These people are not alone. Grocery prices were 11.4 percent higher on average in 2022 than the previous year. Chicken prices increased 14.6 percent, cereals and bakery products jumped 13.0 percent, and beef prices were up 5.3 percent.
Rising prices have put an enormous strain on millions of families—and corporate consolidation in the grocery market could soon tighten the squeeze.
Kroger, the second-largest grocery chain in the U.S., is planning to acquire Albertsons, the fourth-biggest grocer. The $25 billion mega-merger would create a retail behemoth second in size only to Walmart, combining 5,000 supermarket locations and incorporating over 25 brands including Safeway, Jewel, Ralph’s, Vons, Harris Teeter, Shaw’s, and Pavilions.
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In the next few weeks, the Federal Trade Commission is expected to issue a ruling on the proposed Kroger-Albertsons tie-up. That’s why Khan and state attorneys general held listening sessions in Nevada, Colorado, and Arizona—to hear directly from working-class people about whether they believe the Biden administration should reject or approve the deal.
The verdict was clear.
“I don't see this as a merger. I see it as a monopoly,” one attendee said in Nevada. “Our prices will go up, our choices will go down, and the quality of everything is going to be gone.”
But not everyone was confident that the FTC would block the merger, and for good reason. Nine years ago, the FTC let Albertsons merge with another grocery giant Safeway.
The agency required the new combined company to sell some stores to Haggen, a smaller regional supermarket chain, to keep local competition fair, but the fix didn’t work. Within a year, Haggen was accused of violating union contracts and started closing stores. Not long after, Haggen went bankrupt, and Albertsons returned to buy some of the stores.
Today, Kroger is similarly promising to sell off some of its stores to win approval for the merger. But its divestment plan will not address the competition concerns, according to experts who have studied the failures of the Safeway-Albertsons merger.
“Given the concerns about centralization of power, the disastrous Safeway-Albertsons precedent, I think the agency just has to say no here,” Sandeep Vaheesan, the legal director at the Open Markets Institute, told us. “They compete against each other in several local grocery markets.”
“A main concern is if they merge, they will have more power to raise prices on groceries, produce meat, eggs, milk, packaged goods,” Vaheesan added.
Khan, unlike many of her recent predecessors, appears ready to enforce the law.
“This would be one of the largest mergers that we've seen in the grocery sector in quite some time,” she told us following one of the town halls. “Whenever you have deals of this significance, it has the possibility of really shifting people's day-to-day lives. It can lead to higher prices, lower quality, reduced wages for workers, reduced benefits.”
“That process of competition itself is what is best likely to guarantee lower prices, more and better job opportunities, higher quality,” Khan said. “And so as enforcers, our job is to preserve that competition.”