PORTLAND, Ore. (AP) — On Wednesday, Kroger’s CEO, Rodney McMullen, emphasized that the proposed merger with their competitor, Albertsons, would enable both supermarket chains to reduce prices and better compete against major retailers such as Walmart and Amazon.
During a federal court hearing in Oregon, McMullen defended the merger, which would mark the largest grocery chain merger in U.S. history, as the government seeks to block the $24.6 billion deal with a preliminary injunction.
“The moment we merge, we will start lowering prices,” McMullen stated when questioned by one of his company’s attorneys.
The merger proposal, made in October 2022, came after Kroger announced plans to acquire Albertsons. However, earlier this year, the Federal Trade Commission (FTC) filed a lawsuit to halt the merger, claiming it would reduce competition and cause grocery prices to rise further in a time when food prices are already increasing.
In response, McMullen pointed out that Albertsons’ prices are generally 10-12% higher than those at Kroger. He argued that by merging, they would aim to close this price gap to attract more customers. Currently, Walmart accounts for about 22% of grocery sales in the U.S., while a combined Kroger and Albertsons would hold approximately 13%.
“We are confident that prices will continue to decrease,” McMullen added.
His testimony, along with that of Albertsons CEO Vivek Sankaran, is expected to be a key part of the three-week hearing, now halfway through. Their under-oath statements about pricing, possible store closures, and impacts on employees will be closely examined in the potential future of the merger.
Kroger, headquartered in Cincinnati, Ohio, runs 2,800 stores in 35 states and includes brands like Ralphs, Smith’s, and Harris Teeter. Meanwhile, Albertsons, based in Boise, Idaho, has 2,273 stores across 34 states, featuring brands such as Safeway, Jewel Osco, and Shaw’s. Together, both companies employ around 710,000 workers.
During the court proceedings, FTC attorneys argued that in the 22 states where Kroger and Albertsons currently compete, their prices, product quality, private label offerings, and services—like store pickup—are closely aligned. They contended that this competition is beneficial for consumers and would be lost if the merger goes through.
The FTC, along with labor unions, alleges that workers’ wages and benefits could decrease if Kroger and Albertsons no longer compete against each other. They also raised concerns about the risk of store closures leading to “food deserts”—areas where access to grocery stores is severely limited.
Albertsons, however, claims that the merger might actually enhance union jobs, as many of its competitors, including Walmart, have a lower number of unionized workers.
As part of the deal, Kroger and Albertsons plan to sell off 579 overlapping stores to C&S Wholesale Grocers, a supplier that serves independent supermarkets. C&S also owns brands such as Grand Union and Piggly Wiggly.
In a 2022 Senate subcommittee meeting about competition and consumer rights, Sankaran noted that Albertsons’ previous acquisitions, like that of Safeway, had allowed the company to grow from 192 stores to 2,300.
“We do not plan to close any stores; our goal is to sell existing locations,” Sankaran stated at that time.
The FTC has raised concerns that C&S is not adequately prepared to take over these stores. Laura Hall, a senior trial attorney for the FTC, referenced internal documents showing that C&S executives expressed doubts about the quality of the stores they would be acquiring and indicated they might prefer to sell or close them.
In his defense, C&S CEO Eric Winn testified last week in Portland, expressing confidence in the company’s ability to manage the transition successfully.
The FTC is pushing for a preliminary injunction to halt the merger while their lawsuit progresses in front of an administrative law judge. U.S. District Judge Adrienne Nelson is expected to hear from around 40 witnesses before making a decision on whether to grant the injunction.
If she opts to block the merger temporarily, the FTC plans to begin internal hearings on October 1. However, Kroger has already filed a lawsuit against the FTC, claiming that the agency’s internal proceedings are unconstitutional and is seeking to resolve the merger’s merits in federal court. Attorneys general from Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon, and Wyoming have joined the FTC’s lawsuit, while Washington and Colorado have filed separate cases in state courts to prevent the merger.
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Durbin reported from Detroit.
