Kroger's merger with Albertsons will have a major impact on stores - and customers won't like it

Customers could face changes to their shopping experience if the merger between Kroger and Albertsons is approved.

The grocery giants announced the $24.6 billion merger in 2022, saying the deal will better enable the companies to compete with Walmart . In February, the Federal Trade Commission filed a lawsuit to block the deal.

That trial is underway now in U.S. District Court in Portland, Oregon. It’s anticipated to run for three weeks, with lawyers picking through the potential benefits and detriments should the deal go through.

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Laurel Kilgour, research manager at the American Economic Liberties Project, broke down how customers would be affected in the deal. She said prices at Kroger and Albertsons stores would increase after the merger, as there’s less pressure when it comes to pricing.

Court findings revealed Kroger’s biggest competition when it came to setting prices was Albertsons, Kilgour said. Albertsons acted as a “price ceiling,” which is a strategic avoidance of lowering prices in markets where they directly compete with each other.

“They consider each other their primary competitor. That’s a term for their own documents,” Kilgour said.

That suggests that a merger could mean there’s even less competition when it comes to prices.

Kilgour gave an example of pricing during the pandemic. Because of the disruption in 2020, costs on groceries for Kroger went down, but the store still didn’t decrease prices for customers. She said that was because Albertsons was holding firm.

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“It shows competitive intensity created specifically by the other, in markets where they overlap,” she said.

Kroger touts the opposite, saying prices will decrease with the merger. CEO Rodney McMullen previously said the merger allows the company to reinvest in lower prices, a better shopping experience, and higher wages.

A Kroger spokesperson said: "Kroger is merging with Albertsons to bring lower prices to more customers, protect good-paying union grocery jobs, and to better compete with massive retailers Walmart, Costco and Amazon. If the merger is blocked, grocery prices will be higher and the larger, non-union retailers Walmart, Costco and Amazon will become even more powerful and unaccountable."

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