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Kroger and Albertsons CEOs face Senate lawmakers over their planned merger

MARY LOUISE KELLY, HOST:

The biggest supermarket chain in the country wants to buy its biggest competitor. The planned merger of Kroger and Albertsons has raised questions about how it would affect grocery prices, especially at a time of high inflation. Today, the CEOs of both companies were facing questions from Senate lawmakers. NPR's Alina Selyukh is here to explain. Hi, Alina.

ALINA SELYUKH, BYLINE: Hello. Hello.

KELLY: Hello. Hello. All right. Set the stage a little more fully for me. Like, what are the stakes of this merger? Why have this big Senate hearing?

SELYUKH: This is a mega merger. It's worth almost $25 billion. And it affects stores that most of us know. I was talking to someone who said, oh, I don't actually know Kroger and Albertsons, but then you start listing all the other chains these companies own - you've got Safeway, Ralphs, Harris Teeter, Fred Meyer, Food 4 Less. Overall, we're talking over 5,000 stores put together. And this merger comes, as you pointed out, when food prices are really top of mind for a lot of people. Latest government data show groceries more than 12% pricier than a year ago. And this is just when folks are shopping for the seasons of holiday get-togethers. So you have independent retailers, workers unions saying that combining two massive grocers could hurt prices, local competition, potentially jobs. And that's how you get this kind of bipartisan hearing.

KELLY: Today marked an opportunity for the CEOs of these two massive grocers to make their case for why they think this is a fabulous idea. What are they saying?

SELYUKH: The companies kept highlighting that they are the biggest only if you look at traditional supermarkets, and that's not how people shop. Here's Kroger CEO Rodney McMullen.

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RODNEY MCMULLEN: Customers purchase food everywhere, from Walmart and Trader Joe's to Costco and Aldi to Dollar General, 7-Eleven, Walgreens and restaurants, for example.

SELYUKH: So the companies argue particularly Walmart and Amazon are formidable competitors. And together, Kroger and Albertsons say they'll be able to cut costs, maybe negotiate better deals with suppliers. And they promise to pass on some savings to shoppers and their workers.

KELLY: Did it appear that the lawmakers on the Senate judiciary subcommittee were buying these arguments?

SELYUKH: You know, lawmakers from both parties seemed pretty skeptical about the deal. They've raised a lot of concerns about the fact that the two chains do overlap around the country, particularly in the western regions. And they kept bringing up the time when Albertsons had its last big merger. Albertsons bought Safeway in 2015, and the condition was it had to divest over 100 stores. But then the company that bought those stores pretty quickly went bankrupt. And Albertsons actually bought back a bunch of the very same stores at a discount. Here's Republican Senator Mike Lee from Utah.

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MIKE LEE: Hollywood couldn't write a more cynical plot - not if it tried - yet the companies assure us that this is the merger that will make everything better.

SELYUKH: The retailers did try to get ahead of this worry about overlapping stores by offering to spin off or sell hundreds of stores in a structure that federal regulators would approve.

KELLY: Alina, does Congress actually have control here? Can they block this merger if they want to?

SELYUKH: No. Congress doesn't get to decide if this deal goes through. The regulators at the Federal Trade Commission get to decide. They will certainly be watching. It is worth noting that regulators appointed by the Biden administration have gone pretty aggressively after consolidation. They fought several hospital mergers, that big publishing deal of Simon & Schuster and Penguin Random House. So now for Kroger and Albertsons, the fate of their deal likely won't be decided for quite a long time. The companies themselves expect the regulatory review to last all of next year.

KELLY: Thank you, Alina.

SELYUKH: Thank you.

KELLY: NPR's Alina Selyukh. Transcript provided by NPR, Copyright NPR.

Alina Selyukh is a business correspondent at NPR, where she follows the path of the retail and tech industries, tracking how America's biggest companies are influencing the way we spend our time, money, and energy.