After judges in Oregon and Washington ruled against a proposed merger between Goliath food chains Albertsons and Kroger on Tuesday, Albertsons has sued Kroger. Had the $25 billion planned merger passed muster, it would have been “the largest U.S. supermarket merger in history.”
The court decisions were a victory for Northwest consumers, who would have seen grocery store competition crumble. According to Washington Attorney General Bob Ferguson, Albertsons and Kroger operate “more than 300 locations in the Evergreen State, accounting for more than 50% of the state’s grocery sales.”
In a one-mile radius in my neighborhood, we would have had one specialty market (Trader Joes); one national chain (Safeway and QFC); and one membership store (Costco). There has never been a Sam’s Club in this neighborhood to compete with the baby Costco (a business center).
A two-mile radius adds a specialty market (an Asian market, Ranch 99); one employee-owned regional chain (WINCO); and one national chain (a baby Walmart). A Fred Meyer, part of Kroger, is in that extended radius; prices at QFC and Safeway are routinely 10% or more than those at Fred Meyer.
It is also a victory for employees, suppliers and the Federal Trade Commission:
This historic win protects millions of Americans across the country from higher prices for essential groceries—from milk, to bread, to eggs—ultimately allowing consumers to keep more money in their pockets. This victory has a direct, tangible impact on the lives of millions of Americans who shop at Kroger or Albertsons-owned grocery stores for their everyday needs, whether that’s a Fry’s in Arizona, a Vons in Southern California, or a Jewel-Osco in Illinois.
The FTC sued to block the merger in February, along with a “bipartisan group of nine attorneys general” (Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon, and Wyoming).
A Colorado judge temporarily halted the merger this summer.
Albertson’s sues immediately
Without waiting for the ink to dry on Tuesday’s decisions, Albertsons sued Kroger “for breach of its contract agreement, alleging Kroger caused the merger to be blocked. Albertsons said that Kroger failed to exercise its ‘best efforts’ and to take ‘any and all actions’ to secure regulatory approval of the merger.”
Albertsons and Kroger argued that they needed to merge to compete with Walmart, Costco and Amazon. This is fallacious. Costco is a membership store. Walmart is a department store with groceries, like Fred Meyer. QFC and Safeway are modern grocery stores that do not sell camping and sporting equipment, clothes or furniture. Amazon’s food sales are a fraction of the grocery stores.
Employees at Albertsons and Kroger belong to a union; Walmart and Amazon employees do not. Costco workers are part of the Teamsters union.
Consolidation means higher prices for consumers, lower ones for farmers and suppliers
In 2021, The Guardian reported that “for 85% of the groceries analysed, four firms or fewer controlled more than 40% of market share. It’s widely agreed that consumers, farmers, small food companies and the planet lose out if the top four firms control 40% or more of total sales.”
Consolidation in consumer packaged goods is rampant and anti-competitive:
- Four or fewer corporations control 93% of soda sales
- Three cereal companies control 90% of breakfast items
- Four or fewer control 80% of toothpaste and 80% of toilet paper sales.
- Four or fewer control 80% of candy and 60% of snack bars
- Four yogurt companies control 75% of sales
That’s why blocking this merger is somewhat like locking the barn door after the horses have escaped.
It’s an illusion of choice.
Be wary of graphs that exaggerate food sales. For 2023, “Amazon’s e-grocery sales were approximately $36,400,000,000″ but its total sales were $574,800,000,000. Although we may think of Walmart as a “grocery store,” its revenue for the twelve months ending October 31, 2024 was $673,819,000,000, which includes a LOT of items that are not groceries.
Known for gnawing at complex questions like a terrier with a bone. Digital evangelist, writer, teacher. Transplanted Southerner; teach newbies to ride motorcycles. @kegill (Twitter and Mastodon.social); wiredpen.com