The merger of retail giants Kroger and Albertsons is being closely scrutinized by Congress and the FTC. The proposed 25-billion-dollar merger, was announced in mid-October

According to a Kroger press release from 10/14/2022, the merger would dramatically change the supermarket business in the U.S. When the first and second largest supermarket chains are combined, the new company would operate 4,998 stores across 48 states, 66 distribution centers, 52 manufacturing plants, 3,972 pharmacies, and 2,015 fuel centers, across 48 states. 

Last week a congressional hearing was held. Kroger CEO Rodney McMullen and Albertsons' top executive, Vivek Sankaran, faced questions from the Senate Judiciary Committee’s Antitrust panel. 

Congressional leaders expressed concern over the potential for anti-competitive behavior.  And asked whether the merger between the number one and number two grocery companies would result in potential price abuses.

Sen. Mike Lee (R-UT) questioned the timing of any merger. And suggest that “current macroeconomic conditions” will make consumers even more vulnerable to price abuses.

“Won’t Kroger feel less competitive pressure to keep prices low?” asked Committee head Sen. Amy Klobuchar (D-MN).

An aggressive review by the FTC is also underway. The FTC says they want to insure the proposed deal complies with antitrust law. 

Kroger and Albertsons merger may have negatives 

The National Grocer’s Association noted that the new grocery chain would have unprecedented price control power over nationwide grocery prices. That may have negative impacts on local mom-and-pop stores.

“Kroger and Albertsons claim that this merger will benefit consumers — we are not convinced,” said Sumit Sharma with Consumer Reports. Sharma echoed the fear that the merger would “eliminate significant competition.”

“Kroger lists Albertsons as its main competitor in five out of its top 10 markets that cover 546 of the Ohio-based chain’s stores,” Sharma explained.

“Our commitments are to lower prices starting Day 1, continue investing in our associates and stores, and do more in our communities than either of us can do alone,” Kroger CEO Rodney McMullen said.

To counter the critics, the companies are planning to divest some stores. And Albertsons said it was ready to spin off a standalone unit to its shareholders immediately before the deal's close. 

Despite the fear surrounding grocery price increases, executives for Kroger and Albertsons insist the deal would allow shoppers to save money in addition to allowing the newly combined supermarket to keep up with competitors like Amazon and Walmart.

Both companies believe they have a “clear path” toward regulatory approval. And expect the deal to close sometime in 2024.

Meanwhile stock for both Kroger and Albertson’s has consistently outperformed the market since news of the mega-merger was released in October.