New Mexico AG Joins Case with FTC to Stop Merger of Kroger and Albertson

When I was young and interning in the corporate business world, I vividly remember an Executive Vice President of Kroger explaining to me that the grocery business is a penny business. He explained that they may move millions of dollars of groceries in a single store, but the reality is many of those items they are only making a penny on after overhead expenses thus every penny counts. He even wore a penny on the lapel of his coat as a reminder to his staff.

That penny business over the decades has consolidated, merged and grown into a multibillion dollar even more competitive business. The pressures of the largest retailers such as Walmart and Target getting into groceries has added even more pressure thus a deeper consolidation of the industry is occurring. 

The New Mexico Department of Justice is working with the Federal Trade Commission to stop a deal that could see the price of your everyday pantry staples go up even more.

“We are concerned about the proposed merger of the number one and number two grocery chains in this country,” said New Mexico Attorney General Raúl Torrez per reporting by KOB News.

The concern with regulators and with many local communities is when mergers occur competition is limited, prices go up or there become even more "food deserts."

The fate of food access many communities turn on a proposed merger between Kroger, which owns Fred Meyer, and Albertsons, which owns Safeway. The Cincinnati- and Boise-based owners announced their $24.6-billion deal in October 2022, hoping to close by early 2024. Reaction to the proposed merger has been mixed, with the Federal Trade Commission (FTC) and some states threatening legal action to stop it. If successful, one company will have control over grocery prices for South Cushman. The same goes for neighbourhoods in rural areas across the country. Kroger would own 22 percent of the U.S. food retail market.

Per KOB News, Torrez says if the two grocery giants merge, prices are guaranteed to keep going up.

“In the last four years, food prices have gone up 25%. It’s one of the highest price increases in the last several decades,” said Torrez.

Torrez and several other state attorneys general are working on a new lawsuit with the Federal Trade Commission to stop the merger.

According to the lawsuit, Kroger made over $148 billion in revenue in 2022. The company even owns the Smith’s stores in New Mexico.

Albertson’s made around $72 billion in revenue in 2022.

“By reducing competition, you’re going to increase pressure on those grocers and on the communities that they serve. And one of the things that I think, you know, we have to acknowledge is New Mexico is still a very poor state, we have a lot of families who struggle to make ends meet,” Torrez said.

Torrez says another concern is for the workers at each chain. With less competition, he says competitive wages will be harder to come by.

The other issue is this legal battle won’t be a quick one.

Per the Santa Fe New Mexican, an Albertsons spokeswoman didn’t say which locations would be sold but, in a statement, said the company’s merger with Kroger “will expand competition, lower prices, increase associate wages, protect union jobs, and enhance customers’ shopping experience.”

“If the Federal Trade Commission is successful in blocking this merger, it would be hurting customers and helping strengthen larger, multi-channel retailers such as Amazon, Walmart and Costco — the very companies the FTC claims to be reining in — by allowing them to continue increasing their growing dominance of the grocery industry,” the spokeswoman said. “We are disappointed that the FTC continues to use the same outdated view of the U.S. grocery industry it used 20 years ago, and we look forward to presenting our arguments in Court.”

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