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The US Sun
Kroger doubles down on grocery promise with new $1 billion change – and it means cheaper items for shoppers
By Dan J. O'Connor,
2024-08-19
MAJOR grocery chain Kroger promised it would cut the price of food with a $1 billion investment if allowed to merge with Albertsons.
The company has been trying to merge with its competitor for nearly two years, but government and customer backlash have prevented it.
Facing scrutiny and a lawsuit by the Federal Trade Commission, the company is trying to win support for its proposed expansion.
With inflation continuing to push up the cost of some groceries, Kroger is now trying to fight against high prices—if it’s allowed to take over Albertsons.
The company had already promised to lower prices by half a billion dollars, but now it’s doubling the deal.
MERGER MESS
The proposed merger of Kroger and Albertsons would create the most significant single grocery store operator in the country.
Combined, their roughly 5,000 locations would beat out Walmart’s 4,600 US stores.
The federal government stepped in due to the size of the merger.
In February, the FTC sued to block the merger, citing fears that the growth would limit competition in the grocery markets and drive up prices.
“This supermarket mega merger comes as American consumers have seen the cost of groceries rise steadily over the past few years,” Henry Liu, the director of the FTC’s Bureau of Competition said at the time.
“Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today,” he continued.
Kroger fired back, suggesting the FTC is intentionally underestimating the level of competition that would remain in the grocery market after the merger.
“In sum, the [FTC] complaint alleges that the transaction is likely to harm competition, but it can only reach that ‘conclusion’ by distorting the actual marketplace in which Kroger will compete,” the company said in its legal response .
On top of an investment in lowering prices, the company has said it will extend some benefits to employees, Grocery Dive reported.
Kroger is slated to face the FTC in court starting August 26.
This supermarket mega merger comes as American consumers have seen the cost of groceries rise steadily over the past few years.”
Henry Liu FTC official
PUSHBACK
The growth of corporations like Kroger has become a hot topic in politics.
Vice President Kamala Harris has been trying to blame inflation on high corporate profits , though some economists say price-gouging is not a major contributor to high prices.
Meanwhile, other Democrats are throwing a wrench into Kroger’s gears.
Massachusetts Senator Elizabeth Warren and Pennsylvania Senator Bob Casey have written a letter to Kroger’s CEO demanding an explanation of “surge pricing” allegations .
Those claims have sparked some customer complaints – with some asking Kroger to “stop this” practice — though the company has denied ever using surge pricing to increase profits.
Warren is a vocal opponent of Kroger’s merger plans.
Some customers are threatening to stop going to Kroger over alleged price gouging .
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