🛒 Kroger-Albertsons Merger: National Impact

[HCal]

I get what you are saying but, as a consumer I would not be interested in anything that C&S has to offer.

Why not give them a fair shake? We don't know what kind of a store they will put out there... until they put it out there.

I am expecting something similar to the Haggen SoCal/AZ/NV operation but maybe they will get it better somehow. Based on the C&S supplied/merchandised independents I have been to I do not know how they will get it better but they are the biggest grocery wholesaler in the US so I guess they must be doing something right? You never know I guess.

I will definitely give them a fair shake, but I'm not getting my hopes up. However the difference is that with Haggen it was very clear that a big change had suddenly occurred. C&S won't be rebranding many of the stores, so I think the majority of customers won't even notice if there is a slow decline.

They may be good at wholesale, but I think Supervalu's experience with Albertsons proves that being a good wholesaler has nothing to do with being a good retailer.

[veteran+]

For example, in SoCal, it would be much more beneficial if a competitor already in the market, such as Stater Bros and Walmart Neighborhood Market acquired divested stores since they have a desire to compete in said market, otherwise we end up with stores slowly sold to non full-service operators such as Smart & Final, Aldi, and Grocery Outlet, with maybe Stater acquiring a store here and there.

Would that be such a bad thing? I would think that Smart & Final, Aldi, or Grocery Outlet would be much better for communities, as they have a desire to compete in these markets, and will apply downward pressure on prices.

I see your point about full service, but I don't think it's a big issue.
Most people will prefer lower prices to better service.

That is really sad and unfortunate that it has devolved to that. The trajectory downward does not have a bottom. The "cost" for lower prices is very expensive to all of Society in ways that are not always evident (at first, but it is there) until it's too late.

But, you are correct!

[ClownLoach]

For example, in SoCal, it would be much more beneficial if a competitor already in the market, such as Stater Bros and Walmart Neighborhood Market acquired divested stores since they have a desire to compete in said market, otherwise we end up with stores slowly sold to non full-service operators such as Smart & Final, Aldi, and Grocery Outlet, with maybe Stater acquiring a store here and there.

Would that be such a bad thing? I would think that Smart & Final, Aldi, or Grocery Outlet would be much better for communities, as they have a desire to compete in these markets, and will apply downward pressure on prices.

I see your point about full service, but I don't think it's a big issue.
Most people will prefer lower prices to better service.

That is really sad and unfortunate that it has devolved to that. The trajectory downward does not have a bottom. The "cost" for lower prices is very expensive to all of Society in ways that are not always evident (at first, but it is there) until it's too late.

But, you are correct!

The entirely point of the review, divestiture process etc. Is to protect full service competition in a market. This is why I believe that all qualified full service operators should be able to acquire stores to fill out their networks and strengthen themselves. This does not happen with the one-buyer solution that results in the installation of a weakling operator who will by default not be impactful or competitive. 60 something California stores are going to C&S. That theoretically could be two or less per county in the state. The advertising costs alone should be obvious to anyone involved in the process; there will be far more Albertsons signs removed than installed in this sign swap deal which will leave the average low information consumer with the mistaken belief that Albertsons must be going out of business or otherwise diminishing their presence. The only way to correct the image would be a incredibly expensive ad campaign that would not be profitable since it would only benefit a tiny store count.

We would be much better off if say Stater Bros got a chance to expand their network and take 30 or 40 buildings where they don't have coverage, and the rest went piecemeal to other full service operators with some deal to protect the few union workers since we are talking about realistically 20 to 30 stores tops potentially going to the stores that are actually better competitors for certain markets like Gelsons, Northgate and H-Mart. That would be the right thing for the market. There is no benefit to anyone for a lame duck small chain like C&S Albertsons in SoCal, and a much higher chance that stores get downsized or reduced service as they potentially wind up in the hands of lower end operators like Grocery Outlet or Smart&Final.

[retailfanmitchell019]

More merger news:


Kroger/Albertsons divest deal with C&S called “insufficient remedy”: https://www.winsightgrocerybusiness.com ... ent-remedy

Six Dem lawmakers have come out against this deal: Warren (Mass.), Hirono (Hawaii), Sanders (Ver.), Booker (NJ), Ocasio-Cortez (NY-14, The Bronx), and Lee (PA-12, Pittsburgh).

“In their letter to the FTC’s Khan, Warren, Hirono, Sanders, Booker, Ocasio-Cortez and Lee claimed that divestiture arrangements like the Kroger-Albertsons-C&S deal don’t always pan out as expected.

“When massive mergers like this one are proposed, merging parties sometimes offer behavioral or structural remedies to preemptively ‘cure’ their anticompetitive effects. Structural remedies, such as a divestiture of a number of assets, often fail to address harms to competition—in part because companies have an incentive to ensure the failure of spun-off companies and do not mitigate price increases and other negative effects on consumers,” the congressional members said. “Furthermore,” the lawmakers added, “they encourage companies to ‘litigate the fix’ by proposing remedies during ongoing litigation in order to distract a judge’s focus from the original antitrust violations of the merger.”

The letter cited examples of what the senators and representatives deemed as unsuccessful divestiture agreements—for the 2015 Albertsons-Safeway, 2016 Royal Ahold-Delhaize Group and 2013 Hertz-Dollar Thrifty mergers, in which the divesting companies ended up reacquiring locations.”


The Teamsters Union has also opposed this merger, saying the proposed divests to C&S puts jobs at risk: https://progressivegrocer.com/teamsters ... ns-sale-cs


University of Utah study concludes that Kroger/Albertsons merger would dilute labor power: https://www.winsightgrocerybusiness.com ... abor-power


FTC won’t decide on Kroger/Albertsons merger for another month: https://boisedev.com/news/2023/12/15/kr ... -ftc-2024/

Lina Khan before joining the FTC did an analysis of the Haggen trainwreck.

All of this news could be enough to derail the merger.

[ClownLoach]

More merger news:


Kroger/Albertsons divest deal with C&S called “insufficient remedy”: https://www.winsightgrocerybusiness.com ... ent-remedy

Six Dem lawmakers have come out against this deal: Warren (Mass.), Hirono (Hawaii), Sanders (Ver.), Booker (NJ), Ocasio-Cortez (NY-14, The Bronx), and Lee (PA-12, Pittsburgh).

“In their letter to the FTC’s Khan, Warren, Hirono, Sanders, Booker, Ocasio-Cortez and Lee claimed that divestiture arrangements like the Kroger-Albertsons-C&S deal don’t always pan out as expected.

“When massive mergers like this one are proposed, merging parties sometimes offer behavioral or structural remedies to preemptively ‘cure’ their anticompetitive effects. Structural remedies, such as a divestiture of a number of assets, often fail to address harms to competition—in part because companies have an incentive to ensure the failure of spun-off companies and do not mitigate price increases and other negative effects on consumers,” the congressional members said. “Furthermore,” the lawmakers added, “they encourage companies to ‘litigate the fix’ by proposing remedies during ongoing litigation in order to distract a judge’s focus from the original antitrust violations of the merger.”

The letter cited examples of what the senators and representatives deemed as unsuccessful divestiture agreements—for the 2015 Albertsons-Safeway, 2016 Royal Ahold-Delhaize Group and 2013 Hertz-Dollar Thrifty mergers, in which the divesting companies ended up reacquiring locations.”


The Teamsters Union has also opposed this merger, saying the proposed divests to C&S puts jobs at risk: https://progressivegrocer.com/teamsters ... ns-sale-cs


University of Utah study concludes that Kroger/Albertsons merger would dilute labor power: https://www.winsightgrocerybusiness.com ... abor-power


FTC won’t decide on Kroger/Albertsons merger for another month: https://boisedev.com/news/2023/12/15/kr ... -ftc-2024/

Lina Khan before joining the FTC did an analysis of the Haggen trainwreck.

All of this news could be enough to derail the merger.

I think the unions coming out against C&S specifically will be very damaging to the merger deal. But it is also interesting to see that there is support on both sides of the aisle politically. In addition, some of the opposition is from areas that will not experience any effects of the merger like Hawaii. That is unexpected and may potentially help Kroger in their pursuit. I wonder if they have a different acquirer waiting in the wings, or a "plan B" that would enable smaller but well positioned regional players to bid on stores and facilities as needed. I've said all along that if the stores actually go to bid then they will be far more likely to stay open and serve their communities. If it is the intent of C&S as accused to just divest again to non union operators later then that is not helpful to anyone. If the Stater Bros type chains had the ability to bolster their share and expand their territory in this deal then it would be much better for everyone involved.

I think that both sides are acting in a odd manner lately and that there is likely some serious behind the scenes negotiation happening between Kroger and the FTC. That, or there is political maneuvering going on as everyone decides who will be the faces of the discussion based on what will look best in the polls and at the ballot box. I find it odd to see most of the key opponents are from markets where the companies do not overlap which in my opinion discounts their viewpoint. But something tells me that the politicians have decided that they don't want a supermarket merger to be the face of the 2024 elections which means we are likely to see a hard stop decision in early January of either a settlement allowing completion, or a full lawsuit to stop the deal with either outcome getting this story out of the headlines. I do not believe there will be any ambiguity either way at the deadline.

[HCal]

Given the size of Kroger and Albertsons, I think it is perfectly legitimate for any politician to weigh in on the deal even if their region is not directly affected, because this type of thing affects the whole country. For example, it may affect suppliers that sell to Kroger and Albertsons, who will have one fewer customer. It may reduce wages for workers, which can have a ripple effect on the national labor market. Finally, it may make it harder for smaller supermarket chains in those states to operate, as the larger companies gain more control over suppliers. So this is a national issue, and people who live in places where only one (or even neither) of the two companies operates should also have their voices heard.

[mbz321]

IMO, Albertsons/Safetway should just sell off their Northeastern chains (Shaws/Star and Acme) to Kroger and call it a day at this point.

[storewanderer]

More merger news:


Kroger/Albertsons divest deal with C&S called “insufficient remedy”: https://www.winsightgrocerybusiness.com ... ent-remedy

Six Dem lawmakers have come out against this deal: Warren (Mass.), Hirono (Hawaii), Sanders (Ver.), Booker (NJ), Ocasio-Cortez (NY-14, The Bronx), and Lee (PA-12, Pittsburgh).

“In their letter to the FTC’s Khan, Warren, Hirono, Sanders, Booker, Ocasio-Cortez and Lee claimed that divestiture arrangements like the Kroger-Albertsons-C&S deal don’t always pan out as expected.

“When massive mergers like this one are proposed, merging parties sometimes offer behavioral or structural remedies to preemptively ‘cure’ their anticompetitive effects. Structural remedies, such as a divestiture of a number of assets, often fail to address harms to competition—in part because companies have an incentive to ensure the failure of spun-off companies and do not mitigate price increases and other negative effects on consumers,” the congressional members said. “Furthermore,” the lawmakers added, “they encourage companies to ‘litigate the fix’ by proposing remedies during ongoing litigation in order to distract a judge’s focus from the original antitrust violations of the merger.”

The letter cited examples of what the senators and representatives deemed as unsuccessful divestiture agreements—for the 2015 Albertsons-Safeway, 2016 Royal Ahold-Delhaize Group and 2013 Hertz-Dollar Thrifty mergers, in which the divesting companies ended up reacquiring locations.”


The Teamsters Union has also opposed this merger, saying the proposed divests to C&S puts jobs at risk: https://progressivegrocer.com/teamsters ... ns-sale-cs


University of Utah study concludes that Kroger/Albertsons merger would dilute labor power: https://www.winsightgrocerybusiness.com ... abor-power


FTC won’t decide on Kroger/Albertsons merger for another month: https://boisedev.com/news/2023/12/15/kr ... -ftc-2024/

Lina Khan before joining the FTC did an analysis of the Haggen trainwreck.

All of this news could be enough to derail the merger.

Those six dem lawmakers are "big guns" of sorts when it comes to talking down deals like this. They are just like echo chambers- against every deal, present themselves as "anti business" and "pro union" etc. Frankly I do not think their speaking against the merger will accomplish anything but they will try to use their speaking against it to go campaign to union members or something when they are up for re-election.

The problem I see is where are the lawmakers from the actual regions being impacted? Where are some CA lawmakers? Some OR/WA/CO lawmakers? A more powerful message would be if they got 50 lawmakers from the impacted states (and sure, add in those big gun six dem lawmakers from above for the PR points they are looking for) all going against this merger. Maybe that would get the right attention.

Kroger already has an answer to the "insufficient remedy" of C&S divests - they will add another 200 or whatever stores to the divest list. Problem solved? And I still continue to think it is going to be very difficult to tear down C&S as a buyer... they are a stable company. I may not think they're a great wholesaler and may think the support I see in the independents they supply is not good, but they are the largest wholesaler in the US and have been pretty stable over the years.

[storewanderer]

Given the size of Kroger and Albertsons, I think it is perfectly legitimate for any politician to weigh in on the deal even if their region is not directly affected, because this type of thing affects the whole country. For example, it may affect suppliers that sell to Kroger and Albertsons, who will have one fewer customer. It may reduce wages for workers, which can have a ripple effect on the national labor market. Finally, it may make it harder for smaller supermarket chains in those states to operate, as the larger companies gain more control over suppliers. So this is a national issue, and people who live in places where only one (or even neither) of the two companies operates should also have their voices heard.

If this is the case, they actually need to say it because those are valid issues that are not being talked about when people talk against this merger. These politicians are looking for PR points and something to campaign with. nothing more. But their going against it is worth something, I guess... better than the lawmakers in the impacted states who seem to be radio silent now. Not sure if the CA/WA ones who should be fighting this loudly got bought off or what.

[HCal]

If this is the case, they actually need to say it because those are valid issues that are not being talked about when people talk against this merger. These politicians are looking for PR points and something to campaign with. nothing more. But their going against it is worth something, I guess... better than the lawmakers in the impacted states who seem to be radio silent now. Not sure if the CA/WA ones who should be fighting this loudly got bought off or what.

If they want PR points, then they can yell about it to the media, but if they actually plan to file a lawsuit to block it, then it is best to keep quiet.

At this point I think states are waiting to see what the FTC does. If the FTC files a case to block it, states may join the settlement talks. If the FTC gives the go-ahead, a few states might file their own lawsuit, either to block it or to get more concessions.