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Kroger CEO Rodney McMullen promises that merging with Albertsons will lead to substantial price cuts.
“The day that we merge will be the day that we will begin lowering prices,” McMullen said on Wednesday during a federal court hearing in Oregon.
McMullen argued that the $25 billion merger – potentially the biggest chain merger in American history – would immediately lead to price reductions.
However, the Federal Trade Commission (FTC) has countered these claims, arguing that by giving the grocery chains the green light to merge, it would stifle competition and lead to higher prices for millions of Americans. The FTC also argues that the deal would impact grocery workers by limiting their bargaining power for better wages and working conditions.
Unionized workers have expressed concerns about potential store closures and pharmacy and food deserts. Meanwhile, Kroger and Albertsons have proposed selling roughly 600 stores in an effort to increase the proposal’s appeal.
Kroger and Albertsons have been in discussions about the merger for a while. In October 2022, Kroger announced a $24.6 billion plan to buy Albertsons, creating a grocery giant with about 700,000 employees and 5,000 stores. But the plan faced a major setback in February 2024 when the FTC sued to block it, citing concerns about higher prices and reduced competition. In August, Kroger countered, filing a lawsuit against the FTC for challenging the merger, arguing that the agency’s actions are “unconstitutional.”
Kroger’s McMullen argued during Wednesday’s hearing that since Albertsons’ prices are 10-12% higher than Kroger’s, the merger would help close the gap and attract more shoppers. It would also help the two companies compete with Walmart, the largest U.S. based retailer. Currently, Walmart dominates about 22% of grocery sales nationwide. A merged Kroger-Albertsons would hold about 13% of the market.
With grocery prices still high, cash-strapped consumers have increasingly turned to retailers like Walmart and Target in search of more affordable options and better deals, and the retail giants are benefitting. In late August, Kroger said it would cut grocery prices by $1 billion, doubling its earlier pledge of $500 million.