US sues to block merger of grocery giants Kroger and Albertsons, saying it could push prices higher
US sues to block merger of grocery giants Kroger and Albertsons, saying it could push prices higher
Why? The Federal Trade Commission says the $24.6 billion deal would eliminate competition and lead to higher prices for millions of Americans.
Very rare pro-consumer W
115As a Canadian, what’s it like?
4It’s like walking out of a doctor's office without thousands of dollars in debt… I assume.
4
Very rare pro-consumer W
Is it though? I fear that all this will do is allow WalMart to clobber them individually then take over their market share. A&K combined are already smaller than Wally World. (13% vs 22%). It would actually be more helpful to the grocery market if they forced Walmart to divest, what their doing with this is likely to end up with Walmart taking it all.
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Two of the major chains in my area merged a while back and they were required to close down a few of their stores to prevent having a monopoly.
So of course they closed the stores that were under-performing, which just means they closed the ones in poor neighborhoods.
They still owned or kept the leases to the buildings and sub-leased them out with the stipulation that any business taking them over could not carry groceries.
Not only are the people in those areas having to drive a lot further (or spend more time on public transit), but a lot the surrounding businesses to the stores that closed down ended up going out of business themselves.
There's at least one nearly abandoned mini-small, shopping plaza in town due to this.
98Wow never realized it but same. Clemens and Acme went under, then Superfresh. All those shopping centers are still empty or near barren and that was like well over a decade for those to go under
19that seems like anti competitive behavior, I wonder if those kinds of stipulations could be made illegal. Also a commercial vacancy tax probably wouldn't hurt.
11They are legal. This is/was Walmart's M.O. for anticompetitive behavior when one of their stores closed. Any competitors couldn't lease, other businesses failed when they moved and didn't have the traffic, and so you are left with both an unoccupied eye sore as well as a food / product desert....
Good idea on the vacancy and potentially changing the law to prevent anti-competitive stipulations like that.
20
If they won't let others use it they should be compelled to sell it.
6
As an Australian who has to deal with the duopoly of our grocery stores after we let them all merge years ago, it absolutely will drive higher prices and nobody who isn't a shareholder should want this.
They basically "collude" to fix and raise prices here and have whole teams of people who's job it is to monitor and extract as much money out of us as possible. They also force growers to accept shitty deals or they reject their produce due to "not meeting their quality standards" and there's basically nowhere else for them to sell it in the quantities they need to.
Nobody wins in grocery store mergers except the shareholders.
70In Canada we have multiple chains and they collude anyway
11Australia is super concentrated, the duopoly own 70% of the grocery store market as well as others like 60% of the alcohol market. The rest is made up of convenience stores (mostly one company, IGA) and Aldi, the latter having single digit percent.
You basically sell and buy groceries though these two or you don't exist. The CEO of one of them got so cocky during a recent interview he was forced to resign over it.
7I feel the UK does it fairly well. Every supermarket has its place.
Waitrose for the middle class.
M&S for the people who think they're middle class.
Asda, Morrisons and Tesco for the masses.
Aldi and Lidl for the poor.
Heron Foods for the poor that can't cook.
1
With the current extreme price gouging, seems like the perfect political cover to anti-trust the hell out of them and break them up.
You'd know the Libs would moan and get the Murdoch media to pump out the propaganda, but I think the Australian public would be on board. The tax cut reversal went over totally fine, because I guess on average people aren't as stupid as the Libs would like.
(For international readers, the Liberal Party are the leaders of the conservative coalition, confusingly.
1
54So rare.
7
Albertsons has been buying up competitors for a while.
https://en.m.wikipedia.org/wiki/Albertsons
Kroger has a few too:
https://en.m.wikipedia.org/wiki/Kroger#Chains
They turned Pavilions from a nice store to another dingy grocery. I can’t imagine this going through would be good for consumers. Many neighborhoods only have access to 2 stores at best, and I suspect most are already owned by the same parent. A merger would further turn this into a monopoly.
49FTC is a captured agency with revolving door administration between what businesses they regulate and people responsible for regulation.
28You're not wrong, but the appointment of Lina Khan to head the FTC is easily one of the only good things Biden has done while in office.
So, at least she'll go down kicking and screaming before they finally snuff her out, metaphorically speaking.
14
Hell I'm in Seattle and my walkable area (about 2 mile radius for me) would be reduced to this mega corp, Amazon, and a couple Asian marts. I've got two corner stores nearby but their produce is usually not great and mostly they have snacks and microwavables. I suspect smaller towns or less bustling neighborhoods could easily be reduced to just this super chain and nowhere else
8My 2nd closest grocery store is a 40 minute drive, and it’s a Walmart.
2
Bold of them to believe they'll stop price gouging regardless.
45My main takeaway from this article is that Walmart controls nearly twice the market share of Kroger and Albertsons combined - and needs to be broken up.
41There should be automatic break ups of companies that take up too much of the market share.
A hard limit would have an effect, but companies would intentionally just barely hover under the limit. Maybe if it was a chace based thing proportional to their market share. Might be worth looking into.
3Yep, that was the conclusion I came to as well.
Stop them building more stores at the very least.
3
Hmmm….
Kroger: 2,750 stores in 35 states and the District of Columbia
Albertsons: 2,273 stores in 34 states
Total: 5,023 stores. Presumably some would close due to proximity after the merger.Walmart: 5,214 stores in the 50 states, DC, and Puerto Rico
I smell a break up!!!
35I'd love to see it but this isn't the best comparison. The total number of stores aren't what makes a company a monopoly, it's the ratio of one company's market share versus its competitors.
26Guess Kroger and Albertsons didn't pay enough
6
Shittier services and higher prices/more fees, every merger ever.
34Read yesterday about Wendy's rolling out new electronic menus this year so they can enact dynamic pricing. Can't wait until Surge pricing hits another non-negotiable like food.
Burn all these oligarchs down.
4Yhgtbsm. Charge people more during a lunch rush because it’s convenient to do so. For fast food. Fuck them.
That’s stripping the “supply” out of “supply and demand” and just making it “demand pricing.”
They demand you pay more.
2
Capitalism, where a couple of fucking dudes can make or break a whole country.
27And where being poorly suited for wielding that kind of power responsibly makes you more likely to be one of those fucking dudes.
20FML, I hate that this is actually the case. God damn it.
2
Kroger has promised to invest $500 million to lower prices as soon as the deal closes.
Kroger made 1.8 billion last year after expenses, so investing 500 million is a good gesture of faith but, I think that it should be required to be repeated yearly if they wish to make it as a condition of the merger, 500 million while likely wouldn't do much prices wise, wouldn't even be helpful if they aren't doing it past the first year anyway
23It's such a backwards way of doing it though. If they're going to invest that much, that means they need to make a lot of money to cover for it, so they'll have to keep prices where they are until they get the money, then they'll make a show of spending it to lower prices, which really means they're paying the salaries of business analysts who will come up with ideas. Once they've spent $500m coming up with ideas, their obligation will be fulfilled, and they won't have to actually act on any of those price-lowering ideas.
Instead they could just make $500m less in revenue by directly lowering prices immediately.
But then they can't brag about all the good money they spent and will instead whine about how hard up they are, so we'll be stuck with high prices and no relief.
6
Surely this merger is different from all the other ones where corporations lied their asses off then jacked up prices after the merger went through, right?
18I’ve got three grocery stores near my house. One is owned by Kroger and two by Albertsons. I hate to think what would happen if there were zero effective competition.
7Same situation but we have two Kroger-owned (FM and QFC) and one Albertsons-owned (Safeway). The Safeway is right across the street from Fred Meyer, so the chances are they will shut Safeway down if the merger goes through. No point in competing with themselves. So we're looking at fewer options, lost jobs, and higher prices. Wheee.
3
It's interesting living in a partof the USA where I couldn't even tell you where a Kroger or Albertsons is. Maybe they don't tend to overlap with Food Lion's?
11Iirc they own many subbrands that cover most of the country. Here is a list:
15
Hope this goes better than when they tried to stop MS from buying up Activision Blizzard.
11Prices are already outrageous. We don't need more of that.
10Having a non-nationalized monopoly is stupid and bad.
But being champions of free market economics, and then being shocked pikachu when the free market does free market things is even stupider. Especially when nothing is done to reign in this free market crap.
The US wants to be socialist so bad, but can't get their populous to vote for it because of scary words they don't understand. Instead it's done as a random patchwork that of course doesn't work and corporate lobbying just makes it appear as an illusion of choice.
Next time you're out shopping in Walmart or Kroger or whatever look at the aisle you're in and the choices. Let's say cereal. 200 different choices of flavour. 50 different "brands". In reality it's all 1 company. There may be a couple outliers but it's all the same company selling the same sugary processed crap giving you the illusion of choice.
7Kroger and Albertsons are the two major chains in my city (known as Fry's and Safeway here). If they merge, their only real competition left is Walmart.
That said, I wouldn't be surprised if they haven't secretly merged decades ago already. Their products, prices, and branding are nearly identical. Even the commercials they play over the store speakers are the same.
7Block
This
6Does anyone get hanged when it reaches half a billion?
4Awesome. While we're at it let's sue Kroger/Smith's for the absolute eyesore that is the hideous playmobil-lookin 3D people in their ads. The design is so bad it's a public nuisance. Lol
4That and their excessive use of Flo Rida'"Low" in their radio ads.
2
Okay we'll stop the merger. I just need to tell them tomorrow while I'm there to get some tortillas for lunch. Albertsons, ...it's my store! 🎶 🎵
3I wonder how much Walmart paid for that lawsuit.
1