Kroger and Albertsons have argued in separate legal filings that the federal Trade Commission (FTC) is misguided and flat-out wrong in opposing their $24.6 billion merger.
Both retailers contend that the FTC, in suggesting that the deal would give the combined companies an unfair competitive advantage, ignores the fact that they would also be competing against entities like Walmart, Target, Costco and Amazon, none of which traditionally are considered grocers.
Kroger said that the FTC’s position “lacks any basis in the real world.”
And Albertsons said that “simply put, although the Commission alleges that the Merger is likely to harm competition in both of the alleged relevant product markets, the so-called ‘facts’ it has offered in support of this bold assertion completely ignore the commercial realities of a marketplace that is both highly competitive and rapidly evolving.”
Kroger also said in its legal filing that the FTC does not understand the labor market when it judges that a combined Kroger-Albertsons would have an unfair advantage when negotiating with labor unions: “The Commission also purports to allege a myopic ‘union grocery’ labor market that bears no relation to the market in which Kroger actually competes for talent. In reality, (Kroger and Albertsons) are minuscule players in the overall labor market, which includes grocery retailers, non-grocery employers, and non-union employers alike.”
And, responding to the FTC argument that divesting stores to C&S Wholesale would be to put those store at an immediate competitive disadvantage, Albertsons said, “C&S is a large, sophisticated, and well-financed company with deep grocery industry experience, and is well-positioned to successfully operate the significant assets that it will receive as part of any divestiture package and execute on its business plans.”
KC’s View:
I tend to think that Kroger and Albertsons have legitimate arguments that FTC is ignoring reality in certain cases. I tend to worry more about the smaller retailers downstream from these behemoths, as well as the smaller suppliers that may not be able to meet the demands of companies that will be able to say our-way-or-the-highway.
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