Seven US state officials have written to the Federal Trade Commission (FTC) in opposition to the merger of grocery retail giants Kroger and Albertsons.
The seven secretaries of state penned a letter to the FTC asking the anti-trust body to stop the proposed transaction. They said the combination would give the retailers control of “nearly a quarter of the entire US food retail market – a significant consolidation of the already limited competition within the market”.
The two companies have combined sales of more than $200bn.
The retailers announced last year a “definitive agreement” for a merger approved by both boards of directors, with Kroger planning to acquire all of Albertsons’ shares for $34.10 each, implying a total enterprise value of $24.6bn.
“We are strongly opposed to this merger and urge you to stop this corporate consolidation that is draining Americans of their hard-earned wages and livelihoods,” the state officials of Colorado, Arizona, Maine, Minnesota, New Mexico, Rhode Island and Vermont wrote.
“Kroger itself has projected the merger would generate a household ‘saving’ of $5.88 per year, not accounting for inflation,” they said. “However, once there is such consolidation in the market, many consumers will no longer have choice.”
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They added: “Kroger-Albertsons will have no competitive incentive to bring down prices and – despite what Kroger-Albertsons’ claims – consumers will be powerless to hold the company accountable to promises of keeping prices low.
“Moreover, such a merger may also have implications for local suppliers, farmers, and small businesses that rely on a competitive grocery market. If the merger goes through, the lack of competition gives Kroger-Albertsons substantial power to dictate prices that harm growers and shippers who will be forced to cut wages for their own workers.”
The US government, they said, must “ensure that corporate monopolies do not cheat hardworking Americans into paying artificially high prices, so executives and shareholders can line their own pockets”.
According to Reuters, a Kroger spokesperson said the planned deal would benefit customers and store employees, and only “large, non-unionised” competitors would benefit from blocking the deal.
Rodney Mullen, Kroger’s chairman and CEO, said in a statement announcing the deal in October the company believes the transaction will lead to “faster and more profitable growth and generate greater returns for our shareholders”.
The state officials said under the terms of the merger, Kroger and Albertsons will also need to divest up to 400 stores. “It is likely the corporations will target the lowest-performing stores – often those in low-income communities,” they added.
All seven of the secretaries of state are elected Democrats.