Near the end of an hourlong listening session Wednesday on the proposed merger of King Soopers’ parent Kroger Co. and Albertsons, Federal Trade Commission Chair Lina Khan spoke.
“Is there anybody here who supports the merger and wants to share any reasons for it?” she asked. The audience packed in a large room at the Mi Casa Resource Center in Denver burst out laughing.
Khan joined Colorado Attorney General Phil Weiser on his listening tour around the state to hear from Coloradans about the proposed merger of the nation’s two largest grocery chains. Kroger operates about 150 grocery stores in Colorado, while Albertsons has 105 under the Albertsons and Safeway brands. The audience — largely union members who work at grocery stores and food suppliers — overwhelmingly were opposed.
But Khan wasn’t there to stop the merger. She does, however, have to make a big decision that could impact which way this goes.
“For us at the FTC, we don’t get to just do a thumbs-up or thumbs-down on the merger,” Khan said. “If we do, in fact, determine that this merger would violate the antitrust laws, we would have to file a complaint in federal court. It’s ultimately a judge who would decide whether our challenge is successful or not.”
Kroger and Albertsons in October 2022 announced a $24.6 billion plan to merge. In a statement at the time, the companies called themselves “complementary organizations” that when combined, would reach 85 million households, employ 710,000 workers and operate 4,996 stores. Some of the stores are in the process of being sold off to a competitor to meet “requisite regulatory clearance,” according to the companies. In September, New Hampshire-based C&S Whole Grocers said it would buy 413 stores, including 52 Albertsons in Colorado.
After the story published, a King Soopers spokesperson shared a comment about the event:
“To call this a ‘public listening session’ is disingenuous and disheartening. It must have been disappointing to Attorney General Weiser to see his attempt at a public forum co-opted and turned into an anti-merger rally instead of a true public forum representing a broad cross-section of citizens. Even representatives of groups that support King Soopers were silenced by a raucous crowd of out of state interests.
“Only non-unionized retailers, like Walmart and Amazon, will benefit if this merger is blocked. In fact, Kroger joining with Albertsons will mean lower prices for customers, secure union jobs and more food directed to hungry families, with 10 billion meals committed to people in need across America by 2030.”
Kroger has been financially faltering, at least in the mind of investors. In its most recent quarter, same-store sales growth of 1% was lower than Wall Street analysts anticipated. The company lost money, though that was blamed on a $1.4 billion charge related to the nationwide opioid settlement, according to The Wall Street Journal. Its grocery market share was also down about 1.4 percentage points to 10.7% on June 30.
At the event Wednesday, grocery workers talked about what mergers had meant to them in their past. “They promised us we would keep our jobs. That we would have better benefits, a pension for retirement,” said Christine Martinez, who worked at a grocery store in California in 2014 when it was sold to a private-equity firm as part of the Safeway-Albertsons merger.
“Within two weeks, we began to see the signs of trouble ahead. Slow sales. Higher grocery prices, cheaper local competitors. And as a result, our work hours were high and our tensions were at an all-time high. This continued until two months later when I was told our stores were closing,” said Martinez, who now works as a union organizer for the United Food and Commercial Workers in California.
Labor unions brought in grocery store workers from other states to speak because of the opportunity to get in front of an FTC chair, although a handful of locals also got their two minutes. Nancy Madrigal, who works at the JBS Foods meat packing plant in Greeley, said she was concerned not just about how her personal shopping options could be limited but for the sake of her employer. The merger, she said, “will also reduce the market for the meat we produce in our plant and reduce the competition.”
Grocery-chain mergers have long been part of U.S. history. After all, even Kroger’s own “family of companies” includes regional chains added by mergers or acquisitions, including Fred Meyer, Ralphs and King Soopers.
The FTC has rarely interfered with grocery mergers because companies have divested stores to meet regulatory requirements, according to a new white paper from the International Center for Law & Economics, a nonprofit and nonpartisan research center. Only one has been challenged in court since 1988: the tie up Whole Foods and Wild Oats in 2007.
“Over the last 35 years, the FTC has allowed every other supermarket merger and most retail-store transactions to proceed with divestitures,” according to the paper. “The FTC’s historic approach recognizes the reality that competitive concerns regarding supermarket mergers can be readily and adequately remedied by divestitures in geographic markets of concern.”
Khan, though, assured the audience that she was listening. “I know that antitrust enforcers have not always gotten it right. And some of the stories you all share about past experiences are a reminder of that.”
Weiser said there was something about this proposed merger that caught his attention enough to send him to Gunnison in January and hear what the community had to say. He hadn’t planned a statewide tour, but one session led to another one. Consumers called his office to ask when he was stopping by their towns.
“I’ve never done this before. I don’t even know if anyone has done this,” Weiser said. “When this merger was announced, I had an inkling that people understood, cared about and had valuable information. That was my hypothesis. So I said, we need to hear from people across the state.”
Nineteen tours later, Weiser recalls only one person who didn’t oppose the merger.
“He was a farmer in the valley who said, ‘I sell nationwide and so this merger won’t affect me,’” Weiser said. “This merger clearly, for a lot of people, hits home, whether it’s their job, their pension, their pocketbook or their ability to sell. I’ve worked on a lot of mergers. I’ve never worked on a merger that the public was so engaged with as this one.”
He’s still listening, he added. Coloradans who didn’t get a chance to speak can share comments at coag.gov/grocerymerger.
This story was updated on Nov. 2 to add a statement from King Soopers, a Kroger company.