The FTC has bitten off more than it can chew in many of its challenges, with the latest being the proposed Kroger-Albertsons grocery store merger. Currently, the FTC is supported by the Colorado Attorney General (AG) who is leading the fray by winning a preliminary injunction in its efforts to stop the merger.
The Colorado AG and the FTC are both concerned that the merger would eliminate competition in the grocery market. Under the leadership of Lina Khan, the FTC has been challenging many mergers on dubious claims of reducing competition, and this one is no different.
The FTC’s prior challenges are vast and include cases that range from Meta’s acquisition of a virtual reality content creator, to Walmart’s money transfer services. It has even led the FTC to challenge competitive mergers in the videogame industry. With so many dubious challenges this is the first administration where the FTC is losing more challenges than it is winning. Hopefully, the challenges to the Kroger-Albertsons merger in Colorado and by the FTC will reach the same outcome.
Far from creating a monopoly, the merger would leave Kroger with only nine percent of the national grocery market. Part of the reason the share would be so low is that Kroger and Albertsons agreed to sell over 400 stores in 2023 to alleviate concerns about competition, even before announcing another 91 stores in Colorado. As of early July, the stores agreed to sell a total of 579 stores nationwide to alleviate concerns about competition in specific local markets.
Kroger’s position is that through economies of scale the merger would allow it to better compete with the three largest grocery sellers Walmart, Amazon, and Costco. A 2023 study shows that even if Kroger and Albertsons didn’t sell any locations, the merger would still have fewer locations than Walmart and less grocery sales than either Walmart and Amazon, with Costco not far behind.
Walmart brags about being within 10 miles of 90 percent of Americans and groceries from Amazon are only as far away as the front door anywhere it delivers. The relatively few locations where Kroger would lack competition after the merger would be addressed by selling stores in those limited locations, which Kroger and Albertsons have agreed to do.
Kroger is clearly not gaining any monopoly power, but the merger would put a traditional grocery store in position to compete with other business models that have been rising in the grocery market. The result would be ensuring an additional competitive choice for consumers that is not a big box store or delivery.
At each step Kroger and Albertsons have agreed to the terms presented, yet the FTC and Colorado AG seem bent on permanently stopping the merger, regardless of any concessions. The agencies should recognize the pro-competitive nature of this merger and work with Kroger and Albertsons to ensure the few locations that would be left with limited competition are protected, while at the same time allowing an additional strong competitor to challenge the largest grocers. Consumers are better off when mergers like this aren’t stopped by regulators and are allowed lower their grocery prices through stronger competition.
Justin Leventhal is a senior policy analyst for 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 (X) @ConsumerPal.