Kroger and Albertsons were planning a nearly $25 billion merger, a proposal food workers’ unions say would negatively impact workers and consumers.
The Senate Judiciary Committee is holding a hearing Tuesday afternoon to consider the possible implications of the merger.
Kroger and Albertsons say their merger, which they expect to complete in 2024, will help them compete with larger chains and benefit shoppers, workers and local communities.
The two companies believe they have a “clear path” to gain regulatory approval, they added.
“We anticipate divesting businesses in certain areas and we will be working with the FTC to obtain approval for the transaction,” Kroger chief financial officer Gary Millerchip said in a call with analysts last month.
To address antitrust concerns that the merger will stifle competition in local markets where they overlap, Kroger and Albertsons plan to divest businesses.
One way to do this is to create a new, standalone business consisting of 100 to 375 of their current locations. This new entity would be spun off to Albertsons shareholders.
The new company will be an “agile competitor with quality businesses” with strong management. “We think it’s a really clean option in the sense that it could potentially be a quicker way to wrap the strategy around divestitures,” Millerchip said.
But it’s not yet clear whether the divested businesses in the cutthroat food industry can be profitable.
If those locations are weak or sold to a buyer who can’t handle them, Haggen’s rapid collapse could repeat itself, antitrust experts warn.
“The big question for the FTC to ask is how different this is from what it previously promised,” said Christine Bartholomew, who teaches antitrust law at the University of Buffalo School of Law.
Kroger and Albertsons say they need to get bigger to compete against bigger chains. But it’s unlikely a new, smaller spin-off could successfully address those challenges, she said.
The CNN Wire contributed to this report.
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https://abc7.com/kroger-albertsons-merger-grocery/12507931/ Unions say the Kroger-Albertson merger, if approved, would hurt consumers and food workers