The Secret Behind the Kroger-Albertsons Merger🕵️‍♂️

the Chief Executive Officer of Kroger insisted Wednesday that merging with rival Albertson's would allow the two Supermarket companies to lower prices and more effectively compete with retail giants like Walmart and Amazon Kroger CEO Rodney McCullen argued in favor of what would be the largest grocery chain merger in US history while testifying during a federal court hearing in Oregon on the US government's request for a preliminary injunction that would block the $24.6 billion deal the day that we merge is the day that we will begin lowering prices McCullen said while under questioning by a lawyer representing his company the two companies proposed joining forces in October 2022 after Kroger agreed to purchase Albertson's the Federal Trade Commission sued early this year to prevent the deal alleging the merger would eliminate competition and raise grocery prices at a time of already high food price inflation McCullen countered that argument by saying that Albertson's prices are 10- 12 higher than Kroger's and that the merged company would try to reduce that disparity as part of a strategy for keeping customers Walmart Now controls around 22% of us grocery sales combined Kroger and Albertson's would control around 133% we know that pricing is going to continue to go down McCullen said his statements and the upcoming testimony of Albertson's CEO Vivic sankarin were expected to be critical components of the 3-week hearing which is at its midpoint what the two say under oath about prices potential store closures and the impact on workers will likely be scrutinized in the years ahead if the merger goes through Kroger based in Cincinnati Ohio operates 2,800 stores in 35 States including Brands like Ralph's Smiths and Harris Teeter Albertson's based in Boise Idaho operates 2,273 stores in 34 States including Brands like Safeway jeel Osco and Shaw together the companies employ around 710,000 people during the US District Court proceedings FTC attorneys argued that in the 22 states where the two companies compete now they closely match each other on price Quality Private Label products and services like store pickup Shoppers benefit from that competition and would lose out if the merger is allowed to proceed they said usk marketing Professor Anthony Dukes told CBS news that he believes the ftc's argument isn't necessarily accurate I'm not convinced of that argument Duke said so if they're somehow able to combine their stores some of those cost savings through lower wholesale prices could be passed on to Consumers according to the CBS money watch price tracker since 2019 the average price of a dozen eggs has risen 126% while the price of a loaf of bread jumped 54% and a pound of chicken breast Rose 33% but wages also Rose 23% over that period according to the Bureau of Labor Statistics but that's not how a lot of consumers think they just see that grocery bill at the end Leo Feller Chief Economist for the consumer data company numerator told CBS News and they're like oh gosh this is so expensive and they're right the FTC and labor union leaders also claim that workers wages and benefits would decline if Kroger and Albertson no longer compete with each other they've additionally expressed concern that potential store closures could create so-called Food and pharmacy deserts for consumers Albertson's has argued the deal could actually bolster union jobs since many of it and Kroger's competitors like Walmart have few unionized workers under the deal Kroger and Albertson's would sell 579 stores in places where their locations overlap to CNS Wholesale grocers a New Hampshire Bank based supplier to Independent supermarkets that also owns the Grand Union and Piggly Wiggly store brands speaking in 2022 before the US Senate subcommittee on competition policy Anti-Trust and consumer rights the Albertson CEO said his company's acquisition of Brands such as Safeway over the previous decade had allowed it to increase the number of its stores from 192 to 2300 the intent is not to close stores the intent is to divest stores sankaran said at the time the FTC alleges that CNS is ill-prepared to take on those stores Laura Hall the ftc's senior trial Council cited internal documents that indicated CNS Executives were skeptical about the quality of the stores they would get and may want the option to sell or close them CNS CEO Eric WN for his part testified last week in Portland that he thinks his company can be successful in the Venture the FTC is Seeking a preliminary injunction to block the merger while its lawsuit against the deal goes before an administrative law judge us District Judge audrienne Nelson was expected to hear from around 40 Witnesses before deciding whether to issue the injunction if she does decide to temporarily block the merger the FTC plans to hold the in-house hearings starting October 1 Kroger sued the FTC last month however alleging the agency's internal proceedings are unconstitutional and saying it once the merger merits decided in federal the Attorneys General of Arizona California the District of Colombia Illinois Maryland Nevada New Mexico Oregon and Wyoming all joined the ftc's lawsuit on the commission side Washington and Colorado filed separate cases in state courts seeking to block the merger