The Federal Trade Commission is challenging Kroger’s acquisition of Albertsons, saying their merger would be anticompetitive. The Washington Examiner will take a deeper look at what this lawsuit and merger would do to food prices — particularly on the cusp of the November election. Part 3 of Supermarket Sweep Up will explain how the presidential and vice presidential candidates feel about the FTC's lawsuit and their own plans to cut food prices.
The proposed Kroger-Albertsons merger has captured the attention of the Federal Trade Commission and the public, and in an election year marked by inflation , the deal has political undertones.
The plan for grocery giant Kroger to acquire competitor Albertsons, in what would be the largest-ever supermarket merger, was announced in October 2022. The $24.6 billion acquisition has since faced obstacles, the biggest of which is the FTC’s lawsuit to stop the deal, which was announced in February.
The backdrop of the deal is several years of historic food inflation, which has eroded the purchasing power of voters and catapulted the issue, and the economy more broadly, to the front of voters' minds in this year’s election. Kroger's argument is that the acquisition would allow the stores to compete with big-box retailers such as Costco, Walmart, and Amazon, the three largest food stores in the country, and actually lower prices. The FTC, meanwhile, argues the acquisition is actually anticompetitive because Kroger and Albertsons are direct supermarket competitors.
The politics surrounding the merger are a bit jumbled for Republicans. That is because the party, under former President Donald Trump, has tipped more and more toward populism and away from the typical Republican stance of supporting big business and getting the government out of corporate operations.
For instance, Trump’s running mate, Sen. J.D. Vance (R-OH), has been very critical of President Joe Biden's administration but has offered praise for the FTC, the agency targeting the proposed Kroger-Albertsons merger.
The vice presidential contender previously said FTC Commissioner Lina Khan is “one of the few people in the Biden administration who I think is doing a pretty good job.” Last month, while on the campaign trail traveling with Vance, the Washington Examiner asked for him to elaborate further on the matter.
Vance said there are things she has done that he likes and things that he has disliked.
“I think she’s justifiably worried about some of the big technology companies and the concentration of power,” Vance said, adding that he thinks sometimes she gets too aggressive with smaller companies and hinders capital formation.
“So, look, she’s not perfect, but the thing I really like about Lina is she doesn’t focus on the ridiculous woke stuff,” Vance said. “She recognizes that her job, agree or disagree, is to actually work at the FTC and not to be like a ridiculous diversity enforcer. I do appreciate that.”
But the matter of the merger is especially political, perhaps more so than other proposed mergers in other industries, because food prices have featured so prominently in the news.
While inflation has touched nearly every part of the economy, consumers experience the years of cumulative inflation most viscerally at the grocery store. Since January 2021, when Biden was sworn in, grocery prices have increased 21% on average, according to the consumer price index.
Republicans such as Trump and Vance have blamed inflation squarely on Biden and, by association, Vice President Kamala Harris. They blamed a rash of federal spending after the president entered office, chiefly the $1.9 trillion American Rescue Plan, which paid out stimulus checks to many voters.
But Harris and Biden have worked to invoke a different image of the rising prices, one in which greedy corporations, which the vice president grouped Kroger with, have used the opportunity to hike up prices and turn a quick profit through price gouging.
Harris, capitalizing on political discontent with food prices, rolled out a price gouging plan as her campaign’s first economic policy proposal. The campaign announced that she would try to enact the “first-ever federal ban on corporate price-gouging,” although details are unclear — including whether the plan would even be possible without congressional support. In the same speech, she went so far as to call out the Kroger-Albertsons merger as an example of corporations causing higher food prices.
Several Democratic lawmakers told Politico that her price control proposal has no chance of passing anytime soon, even if Democrats win control of Congress.
Republicans have argued that her plan is effectively a form of price controls, which are thought to create shortages by pushing up demand as customers look to load up on goods subject to government-imposed discounts. At the same time, suppliers are less willing to offer the goods, as they no longer command higher prices. The result, Harris’s opponents argue, would be shortages at grocery stores across the country.
Rep. Mike Rulli (R-OH), a grocery store owner, told the Washington Examiner that the Harris plan is “reckless” and emphasized that grocery stores, unlike other businesses, operate on wire-thin profit margins. He said a lot of grocery stores in Ohio have already gone out of business because it is hard to operate with such low profit margins, something that runs counter to the idea of greedy businesses driving up prices.
Peter Loge, director of the George Washington University School of Media and Public Affairs, said there is another element at play in the merger’s intersection with politics: A lot of the stores that would presumably be part of this new mega-corporation are located in key battleground states for Harris and Trump.
“I know one of the things that the candidates are looking at is how much gas and groceries cost in Harrisburg, Pennsylvania, in the suburbs of Atlanta, or in Savannah, or how much they cost in Mesa, Arizona,” Loge told the Washington Examiner.
Loge said it might be an effective strategy for Harris to go to those parts of the country and engage with voters there. He added that Harris should emphasize her middle-class background while saying that she will support a merger if it lowers the price of milk and bread and oppose it if it does not.
“If I were a Democratic candidate in one of those places, I might argue that the Republican solution is to give rich people more money and big businesses should get bigger,” Loge said. “But the Democratic solution is 'Let's make sure groceries are affordable and big companies getting bigger mean higher prices for everyone because there’s less competition.'”
Alex Reinauer is a research fellow at the Competitive Enterprise Institute, where he specializes in antitrust matters. He said one reason the FTC might be interested in this merger is that it is an election year, underscoring just how much this ties into the current political scene.
Reinauer pointed out that the Harris campaign is treading a political tightrope on the FTC more generally. LinkedIn CEO Reid Hoffman, a major Democratic donor, has urged Harris to replace Khan as the head of the FTC if she is elected in November.
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“I would hope that Vice President Harris would replace her,” Hoffman told CNN. “Antitrust is fine. … Waging war is not.”
Reinauer told the Washington Examiner that, with the matter of the FTC, Harris may be trying to strike a balance between focusing on grocery prices and her proposal to combat perceptions of food price gouging with internal donor pushback from people such as Hoffman against Khan’s FTC.
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