It’s been a while since Kroger first announced its acquisition of Albertsons in October 2022. The acquiring firm has already agreed to sell 413 stores to avoid local monopoly complaints from the Federal Trade Commission (FTC), with 237 other stores slated for dispatch if required by regulators. While this should address concerns from the FTC regarding the merger’s effect on competition, union-dominated “listening tours” have revealed anxiety around the potential for store closures and layoffs. Lacking in this conversation is how the merger could turn around Kroger’s recent market share decline, improving competition, consumer prices, and employment.
A key component of antitrust compliance is the assurance that monopolies are not created due to a merger. In the retail store market, local communities usually have a few different options for where to do their shopping. If a merger results in only one company controlling all the supermarkets in a community, this could be seen as a local monopoly. However, this may change in the era of online shopping and cost-efficient delivery. For the time being, nearly 90 percent of customers still do their grocery shopping at supermarkets.
To avoid situations where Kroger-Albertsons stores could present a local monopoly, they have agreed to sell stores (distribution centers and private label brands) to C&S Wholesale Grocers. Even though these sales are at the behest of the FTC, it has not stopped the agency’s public meetings with union members from blaming Kroger instead. The irony becomes even more palpable when considering Kroger is unionized while its primary competitor, Walmart, is not.
The short-sightedness of preventing the merger based on the potential for near-term market shuffling ignores how the merger could improve Kroger’s declining market share. From 2021 to 2023, the grocery market share fell from 12.1 percent to 10.7 percent. Out of the top 10 largest grocers, Kroger has seen the steepest decline, while stores like Walmart have increased their share from 23.7 to 24.2 percent. With a weak quarterly report, Kroger is not looking to acquire Albertsons out of greed but out of competitive necessity.
Read the full Real Clear Markets article here.
Isaac Schick is a policy analyst at the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal.