AG joins fight to block grocery merger

Oregon, the FTC, and the other AGs filed to enjoin the merger in U.S. District Court in Portland following a vote by FTC commissioners Feb. 26.

It is the result of thorough investigations by the FTC and the states into the proposed merger’s anticipated effects, Rosenbaum said in a statement.

“We are doing this to protect Oregon consumers and workers,” Rosenblum said. “We believe this proposed merger would hurt both, and we’re doing our part to prevent it from going forward.”

Background

Kroger and Albertsons are the nation’s two largest grocery chains. In Oregon, the two corporations operate 176 stores, serving nearly every community in the state. Kroger operates 51 Fred Meyer and 4 QFC stores, while Albertsons operates 96 Safeway and 25 Albertsons stores.

The lawsuit seeks to block the proposed Albertsons-Kroger merger. The FTC, Oregon, and the other states participating in the legal action allege the proposed merger would violate the federal Clayton Act. That act prohibits acquisitions which may substantially lessen competition.

“If big grocery stores are allowed to reduce competition this way.” Rosenblum said, “They can charge higher prices for food for no good reason and reduce services, including in their pharmacies. They can also slow the growth of employees’ wages, or even reduce some of those wages. Working conditions and employee benefits can suffer, as well. In short, there’s no good for consumers or workers in this proposed merger — and lots of bad.”

Oregon Department of Justice and Federal Trade Commission investigators found compelling evidence that direct, head-to-head competition between Kroger and Albertsons has forced the two chains to compete vigorously against one another — both on price and on the quality of goods and services offered at their stores, according to Rosenblum.

“This competition has also benefitted workers, by producing higher wages, better benefits, and improved working conditions,” she said.“This supermarket mega-merger comes as American consumers have seen the cost of groceries rise steadily over the past few years,” the FTC’s Bureau of Competition Director Henry Liu said. “Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today.”

Congressman’s concern

Oregon U.S. Senator Ron Wyden is  urging the FTC to block the proposed Kroger and Albertsons merger due to potential negative effects on consumers in Oregon and nationwide.

“Specifically, I am concerned that the proposed merger, if approved, will result in fewer pharmacy options for Oregonians, fewer economic opportunities for Oregon’s small farmers, and harm to Oregon’s workers and consumers,” Wyden wrote in the letter to FTC Chair Lina Khan. “The Oregon Health Authority undertook a preliminary review of the impact of the proposed merger on health care and found that the proposed merger would result in a harmful concentration of retail pharmacies in the state.”

In the letter, Wyden also emphasized this merger would put Oregonians’ privacy at risk due to Kroger’s policies for sharing patient information with law enforcement without warrants.

“As part of a recent inquiry I conducted into major pharmacy chains’ privacy practices, I learned that Kroger provides pharmacy records to law enforcement officials without a warrant or any internal review by a legal professional. This finding places Kroger behind the majority of its peer chain pharmacies in terms of its commitment to safeguarding patient privacy.”

“Less than a decade ago, Albertsons-Safeway proposed a similar divestiture only to buy back many of the divested stores two years later and watch the rest go out of business. I urge the FTC to use the Albertsons-Safeway outcome as a guide to the Commission as it considers possible outcomes of this proposed merger,” Wyden said.

The Kroger-Albertsons merger threatens to make the consolidation crisis in the retail food market worse, following on large deals like the Albertsons-Safeway merger in 2015, as well as the expansion of mega-retailers across the country that have driven independent grocers out of business, according to Wyden.

Grocery future

Grocery stores in the United States are on the decline, according to a report from Food & Water Watch, a consumer advocacy group.  

“The rise in supercenters and supermarket chains coincides with a steep decline in the actual number of grocery stores — a roughly 30 percent loss from 1994 to 2019,” the report states. “The trend is toward fewer but much larger stores, including a surge in those employing 100 or more employees.”

A new supercenter or grocery chain store might bring seemingly greater selection and competitive prices. But these supposed perks conceal the bigger impacts that large grocery retailers have on regional economies, the report states, adding that the U.S. Federal Trade Commission (FTC) analyzed grocery mergers and found that growing market concentration usually leads to a rise in food prices.

“Simply put, market power enables intermediaries like retailers and processors to capture an ever-growing share of food dollars, at the expense of farmers, food chain workers and eaters,” the report states.

Joining Oregon and the FTC in the lawsuit are Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, and Wyoming. Colorado and Washington have already filed lawsuits to stop the merger in their respective state courts.

Read the full report at: https://www.foodandwaterwatch.org/wp-content/uploads/2021/11/IB_2111_FoodMonoSeries1-SUPERMARKETS-V2FINAL.pdf