Look at these ads from 2019. Kroger has cereal on sale for $2.49. Pretty standard, right? But fast forward to October, 2023 and that same cereal, the same size and everything, costs $2 more. That's an 80% price hike in four years. Americans are furious about food prices and they're looking for answers. Prices are through the roof and at work every day I hear people talking about how they can't afford groceries, how they can't afford to put diapers on their child. I'm a father of six. I'm concerned about milk prices, eggs. I already have a problem feeding my kids. Chicken prices rose 10.5%. Egg prices 70.1%. Potatoes 12.4%. Groceries overall have increased 11.3%, and that’s just since March. Right in the thick of all this inflation, Kroger management drops a bombshell: They want to buy Albertsons, and Albertsons agrees. And just like that, the fourth biggest grocer is about to be swallowed up by number two. Over 20 different stores like Smith's, Jewel, and Safeway, all one company. This past year, Albertsons has had better deals and lower prices than Smith’s by far. If this merger goes through, I will no longer have that option. Here's pork spare ribs at Albertsons: $1.47 a pound. At Smith’s, it’s $2.77 a pound. If these groups merge, they're going to be able to set the price at whatever they want it to be at. I don't see this as a merger, I see it as a monopoly. Our prices will go up, our choices will go down, and the quality of everything is going to be gone. You don't have to be an economist to realize competition benefits the consumer and it drives prices to an affordable amount. And this is what we need — competition. This is more than just a merger. This is where and who millions of people buy food from. It's a society changer. And for the first time in a long time, the federal government may actually step in to stop two corporate giants from getting even bigger. I don't have a lot of confidence with the FTC. I'm just seeing history repeat itself. I live close to an Albertsons and I live close to a Smith’s. One of those is going to go under. There's a reason people are concerned. Nine years ago, the FTC, the agency in charge of reviewing megamergers, let Safeway and Albertsons, two of the biggest grocers in America, combine. The agency had the new company sell some stores to keep local competition fair. It's the same promise Kroger is making today. The FTC looked at this merger and said, “If this goes through, you're going to have a very high market share in a number of these local grocery markets. But you can fix that.” The fix was called a “divestment”. Sell off a chunk of stores to keep the local market fair. It's how the FTC manages most
major monopoly power issues. It's really not enforcement. It’s really — it’s more like a behind closed doors negotiation between the government and the companies that want to merge. But the fix didn't go according to plan. I remember the Albertsons and Safeway merger. They agreed to sell 146 stores to a company called Haggen. They’re a small grocer, maybe 30 stores or so. Suddenly it took on all these stores. There were lied to by Albertsons on the price of groceries they were getting, and their prices that they were selling. Within six months or so, Haggen was done. They were bankrupt, out of business. Haggen was just not qualified to buy and operate these stores. You know, it was a fairly small regional supermarket chain. Even the most gifted executive is going to have a hard time. Within a year, Haggen was accused of violating union contracts and started closing stores. Not long after, they went bankrupt. And guess who comes in to buy back some of the stores? Yep. Albertsons. And that leads us back to the looming Kroger and Albertsons merger. So these are two of the largest supermarket chains in the country. They compete against each other in a number of local grocery markets. So I think a main concern is if they merge, they will have more power to raise prices on groceries — produce, meat, eggs, milk, packaged goods. Kroger's management is aware of the monopoly dilemma. They've already submitted a blueprint to sell stores to C&S, a heavyweight in food distribution, not a typical grocer. But the Federal Trade Commission is now under the leadership of Lina Khan. And she's been holding listening sessions with everyday people. Let me say, first of all, I fully appreciate your frustrations. Because all too often mergers are proposed, the CEOs come to D.C., try to sell their deal and say, “Here is all the reasons why it's going to be really good for people.” I think that this merger, as I said on our show, is terrific for customers and for shareholders. You showed me, without a doubt, the possibility, on the eve of a Fed meeting, that you could help bring the cost of food down to many Americans. But ultimately, people, regular people, end up losing out. We don't know for certain, but after holding listening sessions in three states, the FTC appears likely to reject the merger. This would be one of the largest mergers that we've seen in the grocery sector in quite some time. Whenever you have deals of this significance, it has the possibility of really shifting people's day to day lives. It can lead to higher prices, lower quality, reduced wages for workers, reduced benefits. And as we've heard, this merger would likely lead to less competition and put more power in the hands of a single mega-grocery chain. That process of competition itself is what is best likely to guarantee lower prices, more and better job opportunities, higher quality. And so for enforcers, our job is to preserve that competition. Executives are gearing up for a courtroom showdown to get the deal through. Meanwhile, the FTC is mulling over a game plan to block it. This isn't just about shareholders or executives. It's bigger. Are we okay with the idea of a few mega companies controlling our food? Or do we want an actual marketplace? It would send a clear and powerful message that the Biden administration is committed to addressing high prices, addressing inflation, protecting workers, protecting jobs, promoting higher wages. Given the concerns about centralization of power or the — the disastrous Safeway-Albertsons precedent, I think the agency just has to say no here.
