US FTC action to block Kroger-Albertson merger heads to trial Reuters

By Jody Godoy

(Reuters) – The U.S. Federal Trade Commission will argue that Kroger’s (NYSE: ) $25 billion merger with grocer rival Albertsons (NYSE: ) is harmful to shoppers and workers when the agency’s lawsuit goes to court federal in Portland, Oregon on Monday.

The FTC and several states sued to block the deal in February, saying it would eliminate competition between the top two traditional U.S. supermarket chains, leading to higher prices for consumers and less bargaining power for unionized food workers.

The case is an important piece of the Biden administration’s efforts to lower prices for consumers and comes as high grocery bills become prominent in the US presidential race between Vice President Kamala Harris, the Democratic nominee, and former President Donald Trump, her Republican counterpart. opponent.

It’s also a key test of FTC Chairman Lina Khan’s initiative to use antitrust law to boost wages and worker mobility.

The trial is expected to last about three weeks and present evidence about how the big grocers and smaller rivals set prices and view competition in the industry.

Kroger and Albertsons are asking U.S. District Judge Adrienne Nelson to let the deal go forward, saying the tie-up is necessary to compete with multinational corporations such as Walmart (NYSE: ), the largest U.S. grocery retailer, the main bulk buyer Costco (NASDAQ: ) and Amazon.com (NASDAQ: ), which owns Whole Foods.

The two companies say the lawsuit’s focus on traditional supermarkets ignores the fact that consumers typically shop for groceries at a variety of locations, including big box stores like Target and dollar stores like Dollar Tree (NASDAQ: ).

Kroger said it would sell 579 of the roughly 5,000 stores it would own if the deal goes through. Part of the process will focus on whether buyer C&S Wholesale Grocers can successfully run them.

Kroger also pledged to lower food prices by $1 billion after the merger.

Retailers are using several levers to lower prices, including negotiating better deals with suppliers, investing in supply chain automation, or changing the way they label and package products.

While Kroger said it could not provide more details on the price cuts, a source familiar with the matter indicated that the cuts will likely focus on essential and high-demand items first.

“It won’t be peanut butter spread, for example, initially, but will be targeted across a wide range of staples,” the source said.

Arizona, California, Illinois, Maryland, Nevada, New Mexico, Oregon, Wyoming and the District of Columbia are pursuing the case with the FTC.

Washington and Colorado filed their own lawsuits to block the merger. The lawsuits are scheduled to go to trial after the Oregon case.

All states have Kroger and Albertsons locations.