CEOs of Albertsons and Kroger says shoppers would see lower prices after merger
Kim Cordova, President UFCW7, left, speaks about the Kroger and Albertsons Merger. AP Photo/Jenny Kane
(AP) — The chief executive officers of Kroger and Albertsons insisted Wednesday — under questioning from the federal government — that merging would allow the two supermarket companies to lower prices and more effectively compete with retail giants like Walmart, Costco and Amazon.
Kroger CEO Rodney McMullen and Albertsons CEO Vivek Sankaran appeared in Oregon’s U.S. District Court to testify against the Federal Trade Commission’s attempt to block the proposed merger of their companies. During the hearing, the commission’s lawyers suggested that the merger would hurt competition in certain areas where the two are each other’s primary rivals.
“The day that we merge is the day that we will begin lowering prices,” McMullen said while under questioning by a lawyer representing his company.
The two companies proposed what would be the largest supermarket merger in U.S. history in October 2022, after Kroger agreed to purchase Albertsons. But the Federal Trade Commission sued to prevent the $24.6 billion deal, alleging it would eliminate competition and lead to higher food prices for already struggling customers.
Addressing another issue that has worried shoppers in communities with both Albertsons and Kroger-run stores, McMullen said Kroger was committed to not closing any branches immediately if the merger is finalized but might down the road if it decides location changes or consolidations are needed. Sankaran, Albertsons’ CEO, argued that the deal would boost growth and in turn bolster stores and union jobs, because many of its and Kroger’s competitors, like Walmart, have few unionized workers. But when asked what his company would do if the merger didn’t go through, he said it may pursue “structural options” like laying off employees, closing stores and exiting certain markets, if unable to find other ways to lower costs.
“I would have to consider that,” he said. “It’s a dramatically different picture with the merger than without it.”
The testimonies of both CEOs were expected to be critical components of the three-week hearing, which is at its midpoint. What the two say under oath about prices, potential store closures and the impact on workers will likely be scrutinized in the years ahead if the merger goes through.
McMullen said that Albertsons’ prices are 10% to 12% higher than Kroger’s and that the merged company would try to reduce the disparity as part of a strategy for keeping customers. “We know that pricing is going to continue to go down,” McMullen said.
“America needs more competition, more grocery stores, and more leverage for workers to secure better pay and staffing – not less,” the United Food and Commercial Workers International union’s Stop the Merger coalition said in a statement Wednesday.
McMullen said Wednesday that Kroger was committed to honoring existing labor contracts. Under the proposed deal, Kroger and Albertsons would sell 579 stores in places where their locations overlap to C&S Wholesale Grocers, a New Hampshire-based supplier to independent supermarkets that also owns the Grand Union and Piggly Wiggly store brands.