Kroger CEO says Albertsons merger will lead to lower grocery prices

Kroger CEO Rodney McMullen promises that the merger with Albertsons will result in substantial price reductions.

“The day we merge will be the day we start lowering prices,” McMullen said Wednesday during a federal court hearing in Oregon.

McMullen argued that the $25 billion merger — potentially the largest chain merger in American history — would immediately leads to price reductions.

However, the Federal Trade Commission (FTC) countered these claims, arguing that by giving grocery chains the green light to merge, they would stifle the competition and leads to higher prices for millions of Americans. The FTC also claims the settlement would impact food workers by limiting their bargaining power for better wages and working conditions.

Unionized workers expressed concern about possible store closings and pharmacy and food desserts. Meanwhile, Kroger and Albertsons have proposed they sell about 600 stores in an effort to increase the attractiveness of the proposal.

Kroger and Albertsons have been in merger talks for some time. In October 2022, Kroger announced a The $24.6 billion plan to buy Albertsonscreating a food giant with approximately 700,000 employees and 5,000 stores. But the plan faced a major setback in February 2024 when The FTC sued to block itciting concerns about higher prices and less competition. In August, Kroger countered, filing suit against the FTC to challenge the merger, arguing that the agency’s actions are “unconstitutional.”

Kroger’s McMullen argued during Wednesday’s hearing that because Albertsons’ prices are 10-12% higher than Kroger’sthe merger would help bridge the gap and attract more buyers. It would also help the two companies compete with Walmart, the largest US retailer. At present, Walmart dominates about 22 percent of grocery sales nationwide. A merged Kroger-Albertsons would hold up 13% of the market.

With food prices still high, cash-strapped consumers have increasingly turned to retailers Walmart and Target look for more affordable options and better deals, and retail giants benefit. In late August, Kroger said it would reduced food prices by $1 billiondoubling and previous commitment of $500 million.