Federal Trade Commission sues to block Kroger-Albertsons merger

Higher prices. Shuttered stores. Less competition.  

That’s what the proposed merger of Kroger and Albertsons would mean for consumers, according to a lawsuit filed by the Federal Trade Commission and state attorneys general in federal court today. The resulting conglomerate would be the second biggest food retailer in the country with control of more than 20 percent of the food retail market.

A merger of Kroger and Albertsons would dramatically decrease competition within an already consolidated food retail market, which would result in fewer grocery stores and higher food prices, with predictable adverse consequences for food and nutrition security for consumers across the country.  

It is therefore good news for both consumers and the industry that the Federal Trade Commission will seek to block the merger in federal court.  

In addition, the proposed merger could worsen existing anticompetitive retailer marketing practices to the detriment of smaller suppliers and consumers. Retailers and leading manufacturers already enter into cozy contractual relationships that place preferred brands of soda and other low-quality food items in multiple, desirable locations in the store, like check-out aisles, end caps, and floor displays. So-called category captains, appointed by retailers for a price, literally let one manufacturer decide where its competitors’ products are shelved.  

These anti-competitive practices are also migrating online with prime placement on grocery store shelves replaced with premium placements in search results, pop-up ads, and email promotions. The proposed merger would only exacerbate the anti-competitive nature of those practices as the combined company’s buying power grows larger, leading to less bargaining power for smaller food companies and farmers and fewer choices for consumers.  

In February of 2021, CSPI called on the FTC to open an investigation into these practices. In January of 2022, as part of a broader investigation into supply chain disruptions, the FTC asked retailers and manufacturers, Kroger among them, to provide the agency with internal confidential information related to category captains and other trade promotion practices. That investigation is ongoing.

We hope the FTC and state attorneys general prevail in court, and we look forward to the agency completing its work investigating current anti-competitive practices in the supermarket.