Reuters reports that the secretaries of state from seven states – Arizona, Colorado, Maine, Minnesota, New Mexico, Rhode Island and Vermont – have written to Federal Trade Commission (FTC) Chair Lina Khan, calling for regulators to block Kroger’s proposed $24.6 billion acquisition of Albertsons.
All the secretaries of state are elected Democrats. (In some states, secretaries of state are appointed.)
“We are strongly opposed to this merger and urge you to stop this corporate consolidation that is draining Americans of their hard-earned wages and livelihoods,” they wrote.
According to the story, “Staffers for the Federal Trade Commission, which is doing a federal antitrust probe into the deal announced in October, have reached out to experts in farming, food desserts and smaller grocery chains, according to people who spoke with the agency.”
The two chains have not yet commented on the letter, which argues, in part, that “the merger would result in Kroger-Albertsons controlling nearly a quarter of the entire U.S. food retail market – a significant consolidation of the already limited competition within the market.
“Kroger itself has projected the merger would generate a household ‘savings’ of $5.88 per year, not accounting for inflation.
“However, once there is such consolidation in the market, many consumers will no longer have choice. Kroger-Albertsons will have no competitive incentive to bring down prices and – despite what Kroger-Albertsons’ claims – consumers will be powerless to hold the company accountable to promises of keeping prices low.”
KC’s View:
The thing I cannot figure out what the hell the concerns are in Maine, Minnesota, Rhode Island and Vermont – there may be some Shaws stores there, but other than that, if I’m not mistaken, neither Kroger nor Albertsons has a major presence. I’m not sure what the impact is. (Could this be political posturing? The mind boggles.)
I agree that this deal represents “significant consolidation,” but I’m not sure their position about competition is accurate or even fair. After all, in many markets there are competitors named Walmart, Target, Aldi (more now than ever with its proposed purchase of Winn-Dixie and Harveys), and Dollar General, among others. There is a competitor in every market named Amazon.
Kroger and Albertsons will argue that the only way they can compete with Walmart, Amazon and the others is by merging. And Kroger will point to what it calls a two-decade record of lowering prices and not closing stores/laying off workers when making acquisitions.
I continue to believe that this is a public policy argument worth having – we should have a nuanced conversation about the meaning of competition and the impact of consolidation.
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