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New York CNN —
The Federal Trade Commission on Monday sued to block the $25 billion deal between Kroger and Albertsons, alleging the largest supermarket merger in US history would lead to higher prices, store closures and job losses.
The merger, announced in 2022, sought to combine the fifth and tenth largest retailers in the country. The companies own dozens of chains, including Safeway, Vons, Harris Teeter and Fred Meyer.
But the proposed merger came as food prices have skyrocketed. Americans are spending 26% more on groceries since 2020, according to the Bureau of Labor Statistics, and the highest portion of their income on food than any point over the past 30 years.
The FTC, in a statement, said the merger would eliminate competition in the grocery industry, which could drive costs even higher.
Kroger (KR) and Albertsons, which both employ mostly unionized workforces, said they wanted to merge to be more competitive against non-union giants such as Walmart, Amazon and Costco. The grocers are also facing increased pressure from Aldi, the fast-growing German discount supermarket chain.
The merger would accelerate “our position as a more compelling alternative to larger and non-union competitors,” Kroger CEO Rodney McMullen said when the deal was announced.
The two companies have a combined 710,000 workers, nearly 5,000 stores and more than $200 billion in sales. The companies argued that they will be able to use $500 million in cost savings from the deal to reduce prices for shoppers and tailor promotions and savings.
But the FTC in its lawsuit was skeptical of the claim.
“This supermarket mega merger comes as American consumers have seen the cost of groceries rise steadily over the past few years. Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, said Henry Liu, director of the FTC’s Bureau of Competition.
Unions, small grocers and a coalition of Democrats and Republicans on Capitol Hill, including Democrat Elizabeth Warren of Massachusetts and Republican Mike Lee of Utah, also strongly opposed the merger from the start.
Kroger and Albertsons criticized the FTC’s decision.