Kroger’s $24.6 Billion Acquisition in Court Spotlight: CEOs Defend Deal Amid FTC Scrutiny

On Wednesday, CEOs Rodney McMullen of Kroger and Vivek Sankaran of Albertsons testified in a significant antitrust case challenging Kroger’s $24.6 billion acquisition of Albertsons, its largest pure-play competitor. According to Oregon Live, this court appearance before U.S. District Court Judge Adrienne Nelson comes as part of a broader legal battle initiated by the Federal Trade Commission (FTC) and nine state attorneys general.

The trial, which began on August 26, has already drawn substantial media attention. The FTC has accused Kroger of price gouging, particularly on staples like eggs and milk. Recent filings, per Oregon Live, include an email from Kroger Senior Director of Pricing Andy Groff. This email reportedly shows that Kroger has increased prices for eggs and milk significantly above inflation rates. However, Kroger disputes these claims, stating that the FTC has selectively presented the information. Kroger argues that their pricing strategy accounts for various operational costs, not just inflation.

The FTC has also raised concerns about the potential impact of the merger on competition and labor. According to Oregon Live, the agency argues that Kroger and Albertsons view each other as their primary rivals, despite the companies’ claims that larger retailers like Walmart, Amazon, and Costco are their main competitors. An email disclosed by the FTC from Todd Kammeyer, President of Kroger-owned Fred Meyer, indicates that Albertsons is considered a major competitor due to its extensive store network.

Read more: FTC Warns of Grocery Price Hikes in Kroger-Albertsons Merger Battle

Further complicating matters, the FTC asserts that the merger could negatively affect over 700,000 union workers who currently benefit from competitive bargaining between the two grocers. Recent labor disputes underscore these concerns. On August 28, Fred Meyer grocery and meat department workers in Portland went on strike over stalled contract negotiations. The strike, which ended on September 3, was described by the United Food and Commercial Workers Local 555 as a victory for workers. The union is set to resume negotiations with Fred Meyer, emphasizing demands for fair treatment and adherence to federal labor laws.

Oregon Live reports that ongoing investigations are also focusing on allegations that Albertsons executives may have destroyed evidence related to the merger plans announced in 2022.

Source: Oregon Live