Warren, Sanders Urge FTC to Oppose Kroger-Albertsons Deal, Owners of Shaw's and Star Markets
GoLocalProv News Team
Warren, Sanders Urge FTC to Oppose Kroger-Albertsons Deal, Owners of Shaw's and Star Markets
No members of the Rhode Island delegation signed on to the letter.
Democratic Congressman David Cicilline, who has chaired the House Judiciary Committee’s Antitrust, Commercial and Administrative Law Subcommittee, has an inconsistent record of mergers.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTHe was an outspoken critic of the merger between Amazon and Whole Foods, but supported the much larger CVS acquisition of Aetna insurance.
Call for FTC to Act
In the letter, the lawmakers highlight how Kroger and Albertsons have price gouged consumers during the pandemic, and how this merger could increase monopoly power, buyer power, and hurt both companies’ workers and consumers.
The lawmakers also raised concerns about an unusual $4 billion dividend payout by Albertsons that is part of the deal.
“Kroger’s and Albertsons’ histories of aggressive profiteering during the pandemic present a dangerous roadmap for how a larger and more powerful company would act if this acquisition were allowed to proceed,” wrote the lawmakers. “The FTC, when evaluating the potential market and consumer effects of the Kroger-Albertsons acquisition, should closely consider both companies’ history of monopoly, labor, and consumer abuses, and whether this acquisition would exacerbate these abuses for American families.”
A GoLocal story raised issues about how the deal would impact already spiraling grocery costs.
Kroger and Albertsons have both faced allegations of unfair labor practices and unsustainable conditions for their employees – concerns that could be compounded by this merger. Thousands of Albertsons and Kroger workers have gone on strike for better conditions in several states in just the past year alone. The decrease in benefits for employees – who saw their “hero pay” from the pandemic end after just three months – coincided with skyrocketing executive bonuses and billions of dollars in buybacks for shareholders.
“The FTC should, when evaluating the impact of a potential merger, examine Kroger’s and Albertsons’ records of raking in profits and providing massive payouts for executives and big shareholders while putting their frontline employees at risk for little pay and low benefits,” wrote the lawmakers. “Kroger’s and Albertsons’s high combined market shares in certain geographic markets would give the new company significant leverage to continue these harmful trend for workers.”
Early in the pandemic, both companies faced allegations of price-gouging. A lawsuit filed in Texas alleged that 19 grocery stores, including Kroger and Albertsons, participated in price-gouging in the first months of the pandemic, nearly tripling the price of eggs during the state of disaster in March 2020. In 2021, Kroger and Albertsons continued to raise their prices, citing rising costs and inflation, even as they reassured investors that their businesses stood to benefit. In June 2021, on a call with investors, Kroger CEO Rodney McMullen admitted that “our business operates the best” with some inflation, allowing the company to raise prices and boost profits at the expense of consumers.
In addition, lawmakers caution that Albertsons’ proposed $4 billion dividend to shareholders may weaken Albertsons’ ability to compete regardless of whether the acquisition is finalized and may constitute “gun jumping,” a form of collusion illegal under the Sherman Act.
“If the merger is approved, the $4 billion payout will weaken both the merged entity and the new SpinCo company, saddling those companies with excess debt rather than allowing them to invest in workers, improving stores, or reducing prices for customers,” concluded the lawmakers.
Warren has urged regulators to use every tool available to combat market concentration, monopolies, and anticompetitive practices across every sector of the economy: