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March 23, 2023

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Kroger-Albertsons merger: Sens. Murray, Cantwell say plan a threat to consumers

Attorney General Ferguson files lawsuit against $4B dividend plan

By , Columbian staff writer

Criticism is mounting locally and around the state to the announced merger between Kroger, parent company of Fred Meyer and QFC, and Albertsons, parent company of Albertsons and Safeway.

The two supermarket companies announced Oct. 14 that their boards had unanimously approved the merger. If the deal is approved by the federal government, Kroger would acquire all of Albertsons’ shares for $24.6 billion, and assume $4.7 billion of the company’s debt.

“Through a family of well-known and trusted supermarket banners, this combination will expand customer reach and improve proximity to deliver fresh and affordable food to approximately 85 million households with a premier omnichannel experience,” read the companies’ joint statement.

Washington’s two U.S. senators, Democrats Patty Murray and Maria Cantwell, aren’t buying it. They submitted a letter to Lina Khan, chair of the Federal Trade Commission, on Tuesday.

“The merger poses a specific and disproportionate threat to Washington consumers, workers and our underserved communities,” the senators wrote.

Kroger and Albertsons own 21.5 percent of the state’s grocery stores. They are two of the largest grocery retailers in the state.

“Underserved communities throughout Washington benefit from these stores and what they provide in price competition, convenience, high-quality nutritional access and pharmacy services,” the senators’ letter reads. “Given the aggregate share of the state’s retail grocery sector, we fear that Washington is at disproportionate risk of losing stores as a result of the proposed merger.”

To get its merger approved, the companies will have to sell hundreds of locations where there’s too much market overlap, a process known as divestiture. Kroger and Albertsons have a combined 337 stores in the state. Kroger has eight Fred Meyer and QFC stores in Clark County, and Albertsons operates 14 Albertsons and Safeway stores locally.

“There is a significant risk that with this transaction … many stores will be closed, harming consumers and workers and potentially leaving food deserts across our state,” the senators wrote.

Union concerns

Kroger and Albertsons are two of the largest employers of members of the United Food and Commercial Workers International Union.

The union’s president released a statement in October saying the merger would have serious implications for hundreds of thousands of its members, as well as for families concerned about inflation and its effects on the price of food, drugs and gas.

“Given the national impact such a merger would have, the UFCW and our local unions are discussing this and will stand together to prioritize the best interests of our members, their families, and the communities they proudly serve,” said Marc Perrone, the union’s president.

“To be clear, the (United Food and Commercial Workers International Union) will oppose any merger that threatens the jobs of America’s essential workers, union and non-union, and undermines our communities,” he added.

Some consumers have also spoken out. Vancouver resident Lisa Nisenfeld is one of those who is worried about the merger.

“I am now retired, living on a fixed income,” she told The Columbian.

Nisenfeld said she expects higher prices, especially for fresh produce, meat and dairy, should the deal go through.

“Inflation is bad enough already,” she said.

Dividend challenged

Washington Attorney General Bob Ferguson filed a lawsuit Tuesday, asking a court to stop Albertsons from paying its investors a $4 billion dividend that was authorized after the merger announcement. The suit was filed in King County Superior Court.

“Paying out $4 billion before regulators can do their job and review the proposed merger will weaken Albertsons’ ability to continue business operations and compete,” Ferguson said in a statement Tuesday.

Rich Lindsay, a Brush Prairie resident, thinks the merger will not bode well for consumers, especially working-class shoppers.

“I worry that the merger will affect pricing to bring Kroger and Fred Meyer more in line with the high prices of Safeway and Albertsons,” Lindsay told The Columbian.

He fears this will impact shoppers who fall in between shopping at high-end grocery stores and the most affordable ones.

Besides Kroger and Albertsons, Boise, Idaho-based WinCo and Walmart operate multiple locations in Clark County.