The Federal Trade Commission’s (FTC) complaint against the proposed merger of the Albertson’s and Kroger grocery chains was joined by state Attorney Generals across the nation – including Oregon. The Beaver State found even more support as a Community Review Board recently joined the ranks of those opposed to the merger. However, rather than race to protect the status quo, states like Oregon should learn from the proposed Spirit and JetBlue merger, whose failure left consumers with fewer options.
In its complaint, the FTC alleges that a merger between Albertson’s and Kroger would lessen competition for grocery and labor in the markets of supermarkets and union grocery labor, respectively. Part of the reasoning is that competition between these two grocery retailers would drive down prices for consumers. Without such competition, the agency reasons, prices could increase.
While the focus on union labor may fall outside the scope of the consumer welfare standard, a legal tool that filters antitrust violations based on whether they result in consumer harm, a focus on price is valid. Such concern was mirrored in another merger complaint that focused on low-cost travel as opposed to low-cost food.
In the Department of Justice’s (DOJ) complaint against the merger of Spirit and JetBlue airlines, the agency argued against the deal in part due to the Spirit effect, which would decrease fares in markets where the airline competed.
While preserving this effect is seemingly in the interest of consumer welfare, the successful attempt to block the merger reduced competition and consumer welfare in other ways.
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Tirzah Duren is the Vice President of Policy and Research at the American Consumer Institute, a nonprofit educational and research organization. You can follow her on X @ConsumerPal.