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Kroger, Albertsons Formally Respond to FTC

Grocery cart and gavel

Earlier this week, Kroger and Albertsons responded to the Federal Trade Commission’s suit to block the two companies’ $24.6 billion merger.

“The complaint alleges that the transaction is likely to harm competition, but it can only reach that 'conclusion' by distorting the actual marketplace in which Kroger will compete," according to the response.

In Kroger and Albertson’s introduction to its formal answer and defenses of FTC’s lawsuit, the retailers lay out the following reasons why the transaction should go through.

• Kroger and Albertsons will reinvest the savings generated by the merger to lower Albertsons’ grocery prices, adding that the efficiency is supported by Kroger’s “track record of lowering prices for consumers after past acquisitions.”

• Kroger entered into an agreement with Albertsons to keep pace with competitors, extend geographic reach, increase operating efficiency, and lower costs.

• FTC’s complaint does not acknowledge that grocery shopping extends past the traditional marketplace; the retailer now has to compete with club stores like Sam’s Club and Costco, big box retailers like Walmart and Target, discounters including Aldi and Lidl, and ecommerce giants like Amazon.

• C&S Wholesale Grocers is well-equipped to handle the 413 stores that Kroger has already agreed to divest as part of the merger agreement; Albertsons added that C&S will receive the necessary assets to ensure success.

• Rather than decrease union grocery’s bargaining power, post-merger, Kroger said that affected unions will have more bargaining leverage “as a result of the greater number of these unions’ workers employed by Kroger,” said Kroger.

On February 26, the FTC said that the proposed deal would eliminate competition between Kroger and Albertsons, leading to higher prices for groceries and other essential household items for millions of Americans. The loss of competition will also lead to lower quality products and services, while also narrowing consumers’ choices for where to shop for groceries, said the FTC.

“Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today,” said Henry Liu, director of the FTC’s Bureau of Competition, in a statement. “Essential grocery store workers would also suffer under this deal, facing the threat of their wages dwindling, benefits diminishing, and their working conditions deteriorating.”

The U.S. District Judge Adrienne Nelson set Aug. 26 as the start date for the hearing.