Kroger-Albertsons Merger Trial Begins. Here’s What You Need to Know.

Where Americans shop — and how much they pay — for groceries may depend on the outcome of a trial that begins Monday over whether a proposed merger between supermarket giants Kroger and Albertsons is likely to raise prices for consumers.

Federal Trade Commission in February file a lawsuit Kroger and Albertsons have opposed the $24.6 billion deal, arguing that it could reduce competition in the industry, raise food prices and worsen working conditions for workers. Kroger and Albertsons say a merger would benefit shoppers by helping the expanded company compete with discount stores and online rivals.

The hearing in U.S. District Court in Portland, Oregon, is expected to last up to three weeks. Eight states and the District of Columbia have joined the FTC in asking the judge to temporarily halt the merger to give the administrative judge time to review the case. Colorado and Washington stops The merger is scheduled to begin in September.

Here’s how the merger would impact consumers and grocery costs, and why the federal government is seeking to block it.

What does the FTC say?

Allowing Kroger and Albertsons to merge would limit competition in the grocery industry, giving both companies greater market power at the same time. Grocery store prices Prices remain high, according to the Federal Trade Commission. Antitrust enforcement agencies allege that department store chains and other retailers use their size to extract discounts from suppliers but continue to keep prices above market levels.

“Kroger’s acquisition of Albertsons would result in additional increases in grocery prices for everyday items, exacerbating the financial pressures facing consumers across the country today,” Henry Liu, director of the FTC’s Bureau of Competition, said in a statement. statement Earlier this year.

The FTC also alleges the deal would make it harder for unions to negotiate stronger labor contracts, a right protected by federal law, especially in states where both chains have stores close to each other.

What do Kroger and Albertsons say?

Kroger and Albertsons cited increased competition from the likes of Walmart and Costco as the reason behind their decision to join forces in advertising. Their deal in The companies also say there is little geographic overlap in their stores.

Cincinnati, Ohio-based Kroger operates 2,800 stores in 35 states, including brands such as Ralphs, Smiths and Harris Teeter. Boise, Idaho-based Albertsons operates 2,273 stores in 34 states, including brands such as Safeway, Jewel-Osco and Shaw’s. Together, the companies employ about 710,000 people.

“Albertsons offers a complementary footprint and operates in several parts of the country with few or no Kroger stores,” Kroger CEO Rodney McMullen, who will lead the expanded company, said in a statement when the deal was announced.

In defense of integration, Kruger He said Last week, the company announced that it would lower prices for customers and improve job security for workers. The company also recently announced He said The deal is expected to ultimately cut grocery costs by $1 billion. Kroger and Albertsons have said they will spend $1 billion to increase worker wages and benefits and invest $1.3 billion to improve Albertsons stores.

What impact might this deal have?

Consumer prices have been in the spotlight in the US presidential election, with Vice President Kamala Harris calling earlier this month for Prohibition of price manipulation By food suppliers and grocery stores.

Grocery store profits have surged during the pandemic, as larger players have expanded their lead over smaller supermarket chains, the Federal Trade Commission said in a March report. a report.

“As the pandemic has shown, a major shock to the supply chain can have ripple effects on consumers, including the prices they pay for groceries,” FTC Chair Lina Khan said in a statement. statement at that time.

“The FTC’s report examining U.S. grocery supply chains finds that dominant companies have used this moment to gain an advantage at the expense of their competitors and the communities they serve,” added Khan, a former law professor and congressional antitrust counsel who took over as chairman of the FTC in June 2021.

The impact on shoppers may depend on where they live, according to John Mayo, executive director of the Center for Business and Public Policy at Georgetown University’s McDonough School of Business. research A study finds that grocery deals in markets with few competitors often lead to higher prices, while grocery costs in more competitive areas fell after major mergers.

—The Associated Press contributed to this report.