Top executives at Kroger Co. and Albertsons Companies Inc. are expected to receive tough questions Tuesday from lawmakers concerned that the grocers’ planned $25 billion merger will drive up food prices at a time when inflation is a concern.
Kroger Chief Executive Rodney McMullen and Albertsons chief Vivek Sankaran will appear before the Senate Judiciary Committee’s antitrust panel, some members of which have already criticized the deal.
Senators Amy Klobuchar, chair of the antitrust panel, and Richard Blumenthal were among those who signed a letter to Lina Khan, chair of the Federal Trade Commission, saying the merger “raises significant antitrust concerns.”
The deal has also been criticized by labor unions and progressive groups, who have argued that the merger would exacerbate income inequality through job losses and wage erosion, and have urged the FTC to block the deal.
The merger is being discussed at a time when the Biden administration is determined to curb inflation. US consumer prices rose less than expected in October, pushing the year-over-year increase below 8% for the first time in eight months. Food prices rose by 0.6%.
The companies, knowing the deal would be controversial and that antitrust enforcement has become stricter, offered an aggressive plan to allay concerns when they announced the deal, which would see nearly 5,000 stores under one company umbrella. ranging from Safeway to Ralphs and Fred Meyer. .
The companies have said they expect to sell between 100 and 375 stores to address government concerns. Ideally, they would want to find buyers for the facilities, but they could also put them into a new company that would be owned by Albertsons shareholders. UBS has said it believes the plan will satisfy antitrust enforcement officials.
This plan could force the FTC, which is investigating the deal to ensure it is legal under antitrust law, to prove in court not only that the transaction is illegal, but also that the proposed remedy is inadequate.
Walmart dominates the US supermarket market.
The companies could also catch fire on Tuesday over a widely criticized plan to pay Albertsons shareholders a $4 billion dividend. A Washington state court put that plan on hold with the next hearing on Dec. 9. Separately, the Attorneys General of Washington, DC; California and Illinois have also sued to stop that payment, arguing that it would weaken the company’s competitiveness.
Mergers and Acquisitions USA