06:08
Kroger CEO argues that supermarket merger will lower prices
Kroger CEO argues that merging with Albertsons would lower prices and better compete with Walmart and Amazon, despite FTC's concerns over higher grocery prices and job impacts.
The CEO of Kroger, Rodney McMullen, argued in support of the proposed $24.6 billion merger with rival Albertsons, stating that it would enable the two companies to effectively compete with larger retailers such as Walmart and Amazon. McMullen testified during a federal court hearing in Oregon, addressing the U.S. government's request to block the merger.
Impact on Prices and Competition
McMullen emphasized that the merger would lead to reduced prices for consumers. He claimed that Albertsons prices are currently 10-12% higher than Kroger's prices, and the combined company would work to close this gap in order to retain customers. He pointed out that Walmart controls approximately 22% of U.S. grocery sales, while the merged Kroger and Albertsons would account for around 13%.
During court proceedings, attorneys from the Federal Trade Commission (FTC) raised concerns that the merger would lead to a decrease in competition, resulting in higher grocery prices for consumers and lower wages for the unionized workforce. They highlighted that in the 22 states where Kroger and Albertsons currently compete, they closely match each other on price, quality, and services, which benefits shoppers.
Response from Kroger and Albertsons
Kroger and Albertsons have proposed divesting 579 stores in overlapping locations to C&S Wholesale Grocers, as part of their merger agreement. Albertsons CEO, Vivek Sankaran, stated that the intent is to divest stores rather than close them. However, the FTC expressed skepticism regarding C&S's capability to successfully manage the divested stores.
The FTC is seeking a preliminary injunction to block the merger while its lawsuit against the deal goes before an administrative law judge. U.S. District Judge Adrienne Nelson is expected to hear from around 40 witnesses before deciding whether to issue the injunction. Kroger has filed a lawsuit against the FTC, claiming that the agency's internal proceedings are unconstitutional and seeking to have the merger's merits decided in federal court.
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