CINCINNATI — The Kroger Co. says it “remains in ongoing discussions” with the Federal Trade Commission, as Bloomberg News reports the FTC and “a group of states” are preparing to sue to block its acquisition of the Albertsons grocery chain as early as next week.
The report comes after the commission gathered for a closed-door meeting Tuesday.
Bloomberg cited “people familiar with the plans” as saying the companies were trying to schedule meetings with FTC Chair Lina Khan and the agency’s other commissioners to head off a lawsuit.
The company released a statement about the report:
"This merger is the best thing for America's consumers because it will lead to lower prices and more choices on the foods customers need, want and love. Blocking the combination will only embolden large, non-unionized retailers — like Walmart, Amazon and Costco — to continue opposing unions and leaving communities."
Kroger is trying to pull off the largest acquisition in its history, creating a supermarket giant with more than 4,500 stores nationwide. It argues the bigger company will reduce prices and boost wages for union workers, while competing more effectively against larger rivals, including Walmart and Amazon.
Critics countered with claims that Kroger and Albertsons will gain too much market clout – particularly in cities where the two chains are now competitors - leading to higher prices and lower pay for grocery workers.
The I-Team talked to two experts who said a final outcome could hinge on whether regulators believe the combined companies will cause harm with their increased market clout.
"The big question is buying power," said Eleanor Fox, professor emerita of trade regulation at New York University. "These companies will probably get a lot of bargaining power against suppliers and workers. And we know that the FTC is very concerned about that."
Fox is skeptical that Kroger can convince regulators that the deal will be good for consumers.
"The fact of the matter is we keep seeing rising grocery prices and that's very worrying," Fox said. "It's a signal that there's not good competition in the grocery industry."
Kroger tried to refute such criticism last week with a 16-page report that explained how it sacrificed profits to save consumers $5 billion in the last 20 years. The report said Kroger's gross margins declined 5% during the period, while its rivals grew by 1% to 22%.
"I’m not sure what else people want them to address right now," said Xavier University marketing professor Scott Beck. "There are concerns about wages. They said they would invest over a billion dollars in wages. They’re selling over 400 stores to C&S Wholesale. C&S has pledged to honor and recognize the unions. So, union jobs are not being lost as a result of this merger."
Beck is a former executive with Kroger's 84.51 marketing company. He predicted the company would complete the Albertson deal a few days after it was announced. And he hasn't changed his mind.
"When they have done other acquisitions, they have done everything they said they would do," said Beck. "They live up to their word."
