Skip navigation
Kroger Albertsons merger-logos.jpeg Kroger / Albertsons
The pending supermarket merger comes as the U.S. government has been taking a closer look at mergers overall.

Could tech antitrust concerns affect Kroger-Albertsons approval?

Observers cite new era of regulatory concern over impact of consolidation

Concerns about antitrust in the technology sector could weigh on regulators’ considerations of the proposed Kroger-Albertsons merger, according to some industry observers.

The pending supermarket merger comes as the U.S. government has been taking a closer look at mergers overall. While the “old school” of antitrust considerations focused strictly on keeping prices as low as possible for consumers, a “new school” has emerged in recent years in which other factors come into play, said Ronald Lunde, principal at consulting firm The Lunde Co.

These factors include calls to address what is perceived as lax antitrust enforcement, especially in the tech sector, and additionally calls to consider other impacts of consolidation, such as the impact on workers, independent businesses and underserved communities.

In January of this year the Federal Trade Commission and the Department of Justice launched a public inquiry aimed at modernizing merger guidelines to better detect and prevent anticompetitive deals, Lunde noted.

That follows the introduction last year by Sen. Amy Klobuchar (D-Minn.) of the Competition and Antitrust Law Enforcement Reform Act, which he said focuses on the belief that current antitrust enforcement and laws are structurally weak and allow for unregulated and uninvestigated mergers.

“The Kroger-Albertson merger might well be the proverbial ‘fork in the road’ as to whether there has been too much or too little antitrust enforcement,” Lunde said. “The Congress, DOJ and FTC have yet to make that determination.”

Austin Frerick, deputy director of the Thurman Arnold Project at Yale University, specializing in antitrust, told SN that the current antitrust climate does not bode well for the Kroger-Albertsons merger.

“In previous administrations, this sort of merger would sail through,” said Frerick, who was also co-chair of the Biden campaign’s Agriculture Antitrust Policy Committee. “At this point, I expect them to take action to prevent this merger from going through, given the bipartisan backlash to it.”

As previously reported, Kroger and Albertsons have said they could seek to form a spin-off company that would operate between 100 and 375 stores that would need to be divested to satisfy antitrust concerns. The two company’s chief executive officers have already appeared before a Senate subcommittee looking into the merger, although the FTC and/or DOJ will have the final say when it comes to antitrust considerations.

Another aspect of the proposed $24.6 billion merger, which is expected to close in early 2024, is that grocery e-commerce has gained increasing market share in the last two years.

In a report on grocery antitrust considerations issued last year, consulting firm Brattle said the FTC could begin to give greater weight to online grocery operators when it considers grocery competition.

“Although so far there is little precedent for the inclusion of online retail as a significant competitive constraint in the evaluation of traditional grocery retail mergers,  given the rapid growth in the number of consumers conducting their weekly one-stop grocery shopping through online and non-traditional retailers [like Amazon] during the COVID pandemic, the FTC likely will need to consider expanding its relevant market definitions to include these options as significant competitive constraints on traditional grocery retailers,” the report concluded.

Frerick said he didn’t think the rise of online grocery will meaningfully impact how regulators view the grocery market, however.

Lunde, meanwhile, said consumers across income brackets appear to have access to multiple venues for grocery purchases, including online, based on his research with Dr. Martin Paul Block of Northwestern University using Prosper Analytics and Insights Data.

Based on a recent snapshot of the data, for example, consumers reported shopping for groceries at 3.7 different stores, and spending 17.5% of their grocery dollars online. Those figures decline slightly, to 3.4 stores shopped and 14.9% spent online, for households with incomes under $15,000 annually.

“At present, there appears to be no significant barrier for consumers to access physical grocery retail stores or to online shopping access as defined by annual household income levels,” Lunde said, based on that data. “Consumers report shopping at multiple stores regardless of income levels and appear to have relatively equal access to online shopping if they so choose.”

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.