PORTLAND, Ore. (AP) — Grocery store chain Albertsons informed a federal decide Monday that it may need to put off employees, shut shops and even exit some markets if its deliberate merger with Kroger isn’t allowed to proceed.
The 2 corporations proposed what could be the largest grocery store merger in U.S. historical past in October 2022. However the Federal Commerce Fee sued to stop the $24.6 billion deal, alleging it could get rid of competitors and lift grocery costs in a time of already excessive meals worth inflation.
Within the three-week listening to that opened Monday, the FTC is searching for a preliminary injunction that might block the merger whereas its grievance goes earlier than an in-house administrative regulation decide.
“This lawsuit is part of an effort aimed at helping Americans feed their families,” the FTC’s chief trial counsel, Susan Musser, mentioned in her opening arguments on Monday.
Musser mentioned Kroger and Albertsons presently compete in 22 states, intently matching one another on worth, high quality, personal label services like retailer pickup. Customers profit from that competitors, she mentioned, and can lose these advantages if the merger is allowed to proceed.
Prospects are also cautious of the merger, the lawyer mentioned. In Santa Fe, New Mexico, for instance, 278 customers wrote to the FTC to precise their considerations a few mixed Kroger and Albertsons, which might personal 5 of the town’s eight supermarkets.
However Kroger and Albertsons insist the FTC’s objections don’t take note of the rising competitors within the grocery sector. Walmart’s grocery gross sales totaled $247 billion final 12 months in comparison with $63 billion in 2003, for instance; Costco’s gross sales have grown greater than 400% in the identical interval.
“Consumers are blurring the line of where they buy groceries,” Albertsons lawyer Enu Mainigi mentioned.
Mainigi mentioned Albertsons’ clients now spend 88 cents of each greenback at rivals that vary from Aldi and Dealer Joe’s to Greenback Common. Albertsons can’t compete with bigger rivals which have nationwide scale, however becoming a member of forces with Kroger would assist it do this, she mentioned.
Kroger lawyer Matthew Wolf additionally defended the proposed merger.
“The savings that come from the merger are obvious and intuitive. Kroger may have the best price on Pepsi. Albertsons may have the best price on Coke. Put them together, they have the best price on both,” Wolf mentioned.
The 2 sides additionally disagree on Kroger and Albertsons’ plan to promote 579 shops in locations the place their shops overlap. The client could be C&S Wholesale Grocers, a New Hampshire-based provider to impartial supermarkets that additionally owns the Grand Union and Piggly Wiggly retailer manufacturers.
The FTC says C&S is ill-prepared to tackle these shops. Laura Corridor, the FTC’s senior trial counsel, cited inner paperwork that indicated C&S executives had been skeptical concerning the high quality of the shops they’d get and might want the choice to promote or shut them.
However Wolf mentioned C&S has the expertise and infrastructure to run the divested shops and could be the eighth-largest grocery store firm within the U.S., if the merger plan goes via.
The fee additionally alleges that employees’ wages and advantages would decline if Kroger and Albertsons now not compete with one another.
Earlier than the listening to, a number of members of the United Meals and Business Staff Worldwide union gathered outdoors the federal courthouse in downtown Portland to talk out in opposition to the proposed deal.
“Enough is enough,” mentioned Carol McMillian, a bakery supervisor at a Kroger-owned grocery retailer in Colorado. “We can no longer stand by and allow corporate greed that puts profit before people. Our workers, our communities and our customers deserve better.”
The labor union additionally expressed concern that potential retailer closures may create so-called meals and pharmacy “deserts” for customers.
For folks in lots of communities throughout the U.S., when a grocery retailer shutters, “their only source of food actually is walking to the nearest gas station,” mentioned Kim Cordova, the president of UFCW Native 7, which represents over 23,000 members in Colorado and Wyoming.
Mainigi argued the deal may really bolster union jobs, since a lot of Kroger’s and Albertsons’ rivals, like Walmart or Costco, have few unionized employees.
U.S. District Decide Adrienne Nelson is anticipated to listen to from round 40 witnesses, together with the CEOs of Kroger and Albertsons, earlier than deciding whether or not to subject the preliminary injunction. If she does resolve to briefly block the merger, the FTC’s in-house hearings are scheduled to start Oct. 1.
However Nelson’s choice will seal the merger’s destiny, based on Wolf. He mentioned the FTC’s in-house administrative course of is so lengthy and cumbersome that merger offers nearly at all times crumble earlier than it’s via. Earlier this month, Kroger sued the FTC, alleging the company’s inner proceedings had been unconstitutional and saying it needs the merger’s deserves determined in federal courtroom.
The attorneys basic of Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming all joined the case on the FTC’s facet. Washington and Colorado filed separate instances in state courts searching for to dam the merger.
Kroger, primarily based in Cincinnati, Ohio, operates 2,800 shops in 35 states, together with manufacturers like Ralphs, Smith’s and Harris Teeter. Albertsons, primarily based in Boise, Idaho, operates 2,273 shops in 34 states, together with manufacturers like Safeway, Jewel Osco and Shaw’s. Collectively, the businesses make use of round 710,000 folks.
