Thursday, December 12

The proposed merger between US grocery stores Kroger and Albertsons has gone awry for both sides, and Albertsons has filed a lawsuit against Kroger asking for billions of dollars in fees.

Kroger is one of the big three supermarkets in the United States, along with Walmart and Costco, with almost 2,800 stores across 35 states and the District of Columbia. Kroger operates many of these stores under other brand names of their subsidiaries, such as Fred Meyer, Ralphs, King Soopers, and Dillons. Kroger is primarily located in the eastern portion of the country, headquartered in Cincinnati, Ohio, and most of their stores are located in the Midwest and Southeast.

Meanwhile, Albertsons is also one of the top 10 grocery store chains in the US, operating around 2,200 stores under the names Safeway, Vons, Jewel-Osco, and more. Albertsons stores are primarily located in the western half of the country, as well as the New England region, and the company is headquartered in Boise, Idaho.

In 2022, Kroger and Albertsons began talks over a possible merger, allowing them to increase competition against giants like Walmart and Amazon. Walmart is the world's largest company by revenue, with a staggering $648 billion in revenue in 2024, and they currently hold around 22% of the grocery store market share in the United States.

They found the deal to be profitable for both sides, and continued through with the idea. The logistics included selling 579 stores in states where their presences overlapped to C&S Wholesale Grocers, which owns the Piggly Wiggly and Grand Union supermarkets. As the idea came together, it was confirmed to be the country's largest-ever merger in the grocery store business, but they faced some legal issues, first.

The Federal Trade Commission, or FTC, manages all antitrust and consumer protection laws. The FTC instantly saw the possible downsides of the merger and sued, calling on a US District Court Judge to block the deal until an administrative judge at the FTC could consider it. Numerous states also backed this bid, as the merger could severely affect consumers in those states. After a three-week hearing, the judge voted to temporarily block the deal with a preliminary injunction, and another judge in Washington voted to permanently block the merger due to a violation of consumer protection laws.

Consumer protection laws prevent businesses from engaging in unfair or deceptive practices, including fraud and unethical business practices. The Washington judge pointed out the thoughts of the FTC in his ruling, claiming that the merger would result in increased prices for consumers due to the lack of sufficient competition. While Kroger promised to invest into lower prices, the district judge stated that promises could be easily broken, as companies always put shareholders above consumers. This would mean that the merger could end up causing extreme distress for already-struggling American consumers amid high inflation.

The case was planned to head to the FTC and the companies were allowed to appeal the decisions, but it became clear that the costs were too high. Pursuing a massive deal like this is extremely expensive, and appealing would waste more time and money. Due to this, Albertsons pulled out of the deal on Wednesday, which came as a surprise to many, leading to the eventual collapse of the companies' relations.

Soon after they pulled out, Albertsons announced that they were filing a lawsuit against Kroger, aiming to obtain $600 million as a termination fee for the deal and billions of dollars for the money spent on legal proceedings. Kroger refused to pay the demanded fees and confirmed that they were also pulling out of the deal.

The FTC is still yet to review the merger, but it is now irrelevant to the matter at hand. After the decisions to block the deal by judges in lower courts, it collapsed after Albertsons pulled out, but many consumers and officials were relieved by the failure of the merger. Now, both companies will face an intense legal battle in court, but it could take months or even years for those proceedings to continue on.

Fact of the Day (Reader's Digest): Humpback whales use bubbles to catch prey. They create a bubble-net when hunting, forcing the fish to group together and move with the bubbles towards the surface.

Quote of the Day: The best preparation for good work tomorrow is to do good work today.

(Elbert Hubbard)

Word of the Day (Merriam-Webster): Sublimate (verb)- To sublimate something—such as an impulse, desire, or feeling—is to express it in a changed form that is socially acceptable. Sublimate can also mean "to pass directly from the solid to the vapor state."

In a Sentence: Nora later came to understand that she had used painting to sublimate her anger.