With the two largest grocery chains in Alaska proposing a merger, shoppers and state leaders alike have shared concerns of a monopoly leading to rising grocery costs, the closure of several stores, and less favorable contracts for the stores’ workers.
The proposed merger of Kroger and Albertsons has been well publicized since Albertsons announced its intention to sell its Safeway and Carrs stores to Kroger, which operates Fred Meyers, for $24.6 billion in October 2022. However, it can be difficult to keep track of the process.
Here is where we are now
A merger investigation headed by the U.S. Federal Trade Commission is ongoing, and no lawsuit has been filed. The FTC is talking with farmers, competitors, economists, and consumer watchdogs. Various state attorneys general have investigations of their own. Alaska’s Department of Law has not commented on whether it has an open investigation. Kroger states that the deal is on track to close in early 2024.
Rep. Mary Peltola asked the U.S. Federal Trade Commission to block the deal, and Sens. Lisa Murkowski and Dan Sullivan expressed concern that a monopoly could inflate prices. The Alaska Public Interest Research Group, the state’s consumer advocacy nonprofit, has a form letter to oppose the deal.
The heads of Kroger and Albertsons state the merger will “expand access to fresh, affordable food and establish a more compelling alternative to large, non-union retailers.” The head of the Alaska AFL-CIO, a trade association representing many of Alaska’s unions, opposes the merger, noting that Fred Meyers is not well-unionized in Alaska, and may not honor the union contracts of former Safeway and Carrs employees.
The FTC — the U.S. agency charged with enforcing federal consumer protection and antitrust laws — is reviewing the proposed merger for fairness. In basic economics, a monopoly is not part of a free market, and is known as a market failure. A monopoly forbids the open competition that allows consumers to decide what they are willing to pay. A 2017 study found that in markets with few grocery competitors, mergers are associated with price increases.
Attorneys general in multiple states, including Arizona and Washington, have their own investigations. Any or all of them may bring a lawsuit enforcing their state’s consumer protection laws, though it’s unclear how one state’s lawsuit would affect the nationwide merger. If the merger was found unlawful in Arizona, for example, Kroger and Albertsons would have to decide whether to go forward with the whole deal, or find a creative carve-out.
To address monopoly concerns, Kroger announced that it will sell more than 400 of its stores to a competitor, C&S Wholesale Grocers. C&S owns 14 stores in Alaska, though the locations have not been disclosed. History shows this remedy may be cold comfort. As analyst J.G. Collins notes, in 2017, Albertsons sold 17 stores to a competitor to push a merger through antitrust investigations, but the competitor who bought the stores was ill-equipped to take on so many. They went bankrupt, and sold some of the stores back to Albertsons. C&S has 160 locations nationwide, and would be taking on an additional 413 stores.
Here is what will happen next
Based on the investigation, which is expected to close in early 2024, the FTC will decide whether to start the process of blocking the merger. Kroger and Albertsons will then defend itself in the FTC proceeding, and likely appeal the decision in court. Also, one of the state attorneys general may bring their own lawsuit.
For or against, the deal impacts Alaskans, especially. In many neighborhoods, the only choices are Fred Meyer, Safeway, or Carrs. Options for action include writing representatives, joining movements run by consumer groups, and choosing where to shop. Options for not acting include popping the Kroger-brand popcorn to watch this unfold. But you may find the bag’s price changed.
This post is a submission to The Alaska Current. Please send submissions to news@thealaskacurrent.com.