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FTC eyes Kroger, Albertsons merger impact on small operators

Agency examines how pricing power can pressure suppliers, hurt independents: Report

The Federal Trade Commission is looking into whether the proposed Kroger, Albertsons merger will put pressure on suppliers and result in harm to small grocery chains, according to a Reuters report.

It’s a move that’s welcomed by the National Grocers Association, which has long maintained that large retail players have access to lower prices that smaller retailers do not, which they say is a violation of the Robinson-Patman Act.

“It’s a positive sign that they are recognizing the impact to competition when there is an enhancement to buyer power because of consolidation,” Christopher Jones, senior VP of government relations at NGA, told Supermarket News.

The Reuters article said FTC antitrust officials have reached out to “experts in farming, food deserts and smaller grocery chains” to learn more about the pricing implications of the proposed $24.6 billion merger, which would combine the country’s two largest traditional supermarket operators. Among the groups the FTC has reportedly reached out to are the Rocky Mountain Farmers Union and the Centers for Science in the Public Interest.

The FTC has also met with the NGA, and with retailers and wholesalers, Jones said.

“We think they have done their homework,” he said. “They have talked to a good number of retailers and wholesalers, so it’s a good sign they are looking at all dimensions of competition.”

Jones said FTC antitrust officials met with the NGA this past spring, but have not met again since.

The NGA has not officially opposed the merger, he said, but would instead like to see better enforcement of existing antitrust law.

“That’s why we are calling on the FTC to enforce the Robinson-Patman Act, and calling on congress to give Robinson-Patman more teeth,” said Jones.

Jones said NGA also remains concerned about plans for the proposed spin-off of up to 650 stores to satisfy antitrust concerns. Reports this week said Kroger has been in talks with multiple potential buyers, but Jones said smaller retailers should have a seat at the table.

“We think regional and local operators should have a chance to purchase divested assets if the merger were approved, because they have a better chance of operating those stores successfully,” he said.

According to a spokesperson from Kroger: “Kroger will not lay off any frontline associates or close any stores, distribution centers or manufacturing facilities as a result of this merger. We are working with the Federal Trade Commission to develop a thoughtful divesture plan — either through selling stores to strong buyers or by creating a standalone independent company. Kroger and the FTC are focused on ensuring that any divested stores are positioned for success as part of a business with appropriate management experience, a sound business plan, strong balance sheet and the financial stability to continue to serve their communities.”

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