Kroger, Albertsons Expected to Defend Grocery Merger at Senate Hearing

Also scheduled to testify are

Michael Needler Jr.,

CEO of regional grocer Fresh Encounter Inc.;

Sumit Sharma,

senior researcher at Consumer Reports; and

Andrew Sweeting,

professor of economics at the University of Maryland. 

Kroger, the largest U.S. supermarket chain by sales, in October agreed to acquire Albertsons, the second-largest operator, for about $20 billion, in a deal that the companies said would boost their scale and technology, and help them compete better against rivals. Together, the companies could command about 13% of food-retail sales in the U.S. after divestitures, below

Walmart Inc.’s

22%, according to J.P. Morgan analysts. 

Since then, the proposed merger has drawn opposition from elected officials, independent retailers and some union groups over its potential impact on workers’ jobs, as well as on industry competition and food prices for consumers. Some lawmakers in Washington, including Ms. Klobuchar, and state-level officials have said they worry the merger could hinder competition.

The hearing is scheduled to start at 3 p.m. ET and will be streamed on the subcommittee’s website. 

Kroger and Albertsons have said the proposed merger would give them a more national reach with a bigger network of stores, distributors and suppliers. The companies have said they expect to invest $500 million in keeping prices low, along with spending $1 billion on wages and benefits and $1.3 billion on improving Albertsons stores. 

The chains have said they expect the regulatory review process to take as long as two years, with the deal closing in early 2024. They have submitted information on the proposed deal to the Federal Trade Commission for review and have said they expect to sell stores to secure approval. In grocery-sector deals, regulators typically have focused on examining market share and overlaps in specific geographic regions. 

Ms. Klobuchar, who chairs the Senate Judiciary Committee’s competition and antitrust subcommittee, in October signed a letter from senators that encouraged FTC Chair

Lina Khan

to investigate the proposed merger. Mr. Lee said in October that he would ensure antitrust laws are enforced with the proposed deal. 

Sens.

Alex Padilla

and

Dianne Feinstein,

California Democrats who are also members of the Senate Judiciary Committee, in November raised concerns to Messrs. McMullen and Sankaran over the proposed merger’s potential impact on consumers and workers in California. Sens. Elizabeth Warren (D., Mass) and Bernie Sanders (I., Vt.), along with Rep. Jan Schakowsky (D., Ill.), in October separately urged Ms. Khan to oppose the deal. 

A group of state attorneys general has asked Albertsons to delay a $4 billion dividend payment, announced when the companies agreed to their merger, until antitrust officials finished reviewing the deal. The attorneys general have said the dividend could hurt Albertsons’ ability to compete with Kroger and other grocers, particularly if the deal doesn’t go through. Albertsons has said the dividend isn’t conditioned on the merger and that the company still would have $3 billion of liquidity after making the payment. 

Washington state’s attorney general this month filed a lawsuit against the companies to block the payment. A state court commissioner temporarily stopped the dividend and issued a temporary restraining order. The King County Superior Court in Washington said it has scheduled a hearing in December that will decide whether Albertsons can go through with the payment. 

Attorneys general from California, Illinois and Washington, D.C., filed a separate lawsuit this month against the companies to stop the dividend. The U.S. District Court for the District of Columbia denied that request.  

Write to Jaewon Kang at [email protected]

Also scheduled to testify are

Michael Needler Jr.,

CEO of regional grocer Fresh Encounter Inc.;

Sumit Sharma,

senior researcher at Consumer Reports; and

Andrew Sweeting,

professor of economics at the University of Maryland. 

Kroger, the largest U.S. supermarket chain by sales, in October agreed to acquire Albertsons, the second-largest operator, for about $20 billion, in a deal that the companies said would boost their scale and technology, and help them compete better against rivals. Together, the companies could command about 13% of food-retail sales in the U.S. after divestitures, below

Walmart Inc.’s

22%, according to J.P. Morgan analysts. 

Since then, the proposed merger has drawn opposition from elected officials, independent retailers and some union groups over its potential impact on workers’ jobs, as well as on industry competition and food prices for consumers. Some lawmakers in Washington, including Ms. Klobuchar, and state-level officials have said they worry the merger could hinder competition.

The hearing is scheduled to start at 3 p.m. ET and will be streamed on the subcommittee’s website. 

Kroger and Albertsons have said the proposed merger would give them a more national reach with a bigger network of stores, distributors and suppliers. The companies have said they expect to invest $500 million in keeping prices low, along with spending $1 billion on wages and benefits and $1.3 billion on improving Albertsons stores. 

The chains have said they expect the regulatory review process to take as long as two years, with the deal closing in early 2024. They have submitted information on the proposed deal to the Federal Trade Commission for review and have said they expect to sell stores to secure approval. In grocery-sector deals, regulators typically have focused on examining market share and overlaps in specific geographic regions. 

Ms. Klobuchar, who chairs the Senate Judiciary Committee’s competition and antitrust subcommittee, in October signed a letter from senators that encouraged FTC Chair

Lina Khan

to investigate the proposed merger. Mr. Lee said in October that he would ensure antitrust laws are enforced with the proposed deal. 

Sens.

Alex Padilla

and

Dianne Feinstein,

California Democrats who are also members of the Senate Judiciary Committee, in November raised concerns to Messrs. McMullen and Sankaran over the proposed merger’s potential impact on consumers and workers in California. Sens. Elizabeth Warren (D., Mass) and Bernie Sanders (I., Vt.), along with Rep. Jan Schakowsky (D., Ill.), in October separately urged Ms. Khan to oppose the deal. 

A group of state attorneys general has asked Albertsons to delay a $4 billion dividend payment, announced when the companies agreed to their merger, until antitrust officials finished reviewing the deal. The attorneys general have said the dividend could hurt Albertsons’ ability to compete with Kroger and other grocers, particularly if the deal doesn’t go through. Albertsons has said the dividend isn’t conditioned on the merger and that the company still would have $3 billion of liquidity after making the payment. 

Washington state’s attorney general this month filed a lawsuit against the companies to block the payment. A state court commissioner temporarily stopped the dividend and issued a temporary restraining order. The King County Superior Court in Washington said it has scheduled a hearing in December that will decide whether Albertsons can go through with the payment. 

Attorneys general from California, Illinois and Washington, D.C., filed a separate lawsuit this month against the companies to stop the dividend. The U.S. District Court for the District of Columbia denied that request.  

Write to Jaewon Kang at [email protected]