Kroger-Albertsons Merger FTC Trial: Everything Revealed on Day One

The Kroger-Albertsons merger is currently under federal investigation as the CEOs testify before the FTC. The testimony from the CEOs revealed their intended plans for the proposed merger, should the government allow it to go forward. However, there is some debate as to whether the CEOs will be able to pull off their proposed plans.

Kroger-Albertsons Merger: Day One of the FTC Trial

ABC News reports that the first day of the FTC trial of the Kroger-Albertsons merger, which took place on Aug. 26, featured ambitious testimony.

Kroger CEO, Rodney McMullen, took the stand in a federal courtroom in Oregon as part of a three-week hearing to defend the merger with Albertsons after the U.S. government requested a preliminary injunction that would block the deal. According to McMullen, the company would be able to lower prices and contend with larger retailers such as Costco, Walmart, and Amazon, if the merger was allowed to proceed.

Additionally, McMullen stated that Albertsons’ prices are 10% to 12% more than Kroger’s, and he contended that the combined business should try to close that difference as part of its new customer retention plan. It would be the biggest supermarket chain merger in American history if it goes through.

Finally, McMullen promised that the company would be able to lower grocery prices in the wake of the merger. “The day that we merge will be the day that we will begin lowering prices,” he said in his testimony, according to Quartz.

The Federal Trade Commission (FTC), in response, has refuted these promises, claiming that approving the supermarket chains’ merger would impede competition and drive up costs for millions of Americans. Additionally, the FTC claims that the agreement will weaken the bargaining ability of grocery workers to demand better pay and working conditions.

C&S Wholesale’s Expanding Role

It was disclosed back in April that the two companies planned to sell C&S Wholesale Grocers a total of 579 sites in overlapping markets for $2.9 billion. This is an increase from the original proposal, which called for selling 413 locations for $1.9 billion. Kroger will additionally award C&S its Haggen banner in accordance with this updated agreement. Furthermore, C&S will license the Safeway banner in Arizona and Colorado and the Albertsons banner in California and Wyoming. The company will also receive access to many private-label brands in addition to its pledge to keep all stores open and adhere to current labor agreements.

This agreement was part of the larger Kroger-Albertsons merger, which went forward until the FTC sued to block it.

Local unions have also resisted the proposed merger between the two grocery conglomerates, with numerous representatives opposing it. According to an Albertsons spokesperson, if the planned merger goes through, no stores will close, and frontline employees won’t be impacted.

“Together, we have committed that no frontline workers will lose their jobs and no stores will close as a result of the merger, which is true for stores that remain with Kroger and those that are transferred to C&S,” said Kroger CEO Rodney McMullen in a statement at the time. “C&S has also committed to maintaining transferred associates’ pay and health and wellness plans and to assume all collective bargaining agreements.”

Furthermore, McMullen said that colleagues in the sold locations would become associates of C&S upon the closing of the Kroger-Albertsons merger agreement and the resolution of many legal issues. Until then, they will carry on working for Kroger or Albertsons, respectively, and those stores will continue to operate in the same manner.

The FTC trial is set to continue today and progress over the next few weeks.