In fact, Albertsons did the exact same thing just eight years ago, when the supermarket giant acquired Safeway. Divestitures have been regulators’ favored mode of enforcing antitrust law for four decades, and their track record of preserving or bolstering competition is mostly abysmal. The evidence that such a plan would have the desired effect is, as you might expect, lacking. The idea behind the spin-off is something akin to a carbon credit for economic concentration: If two merging companies isolate the parts of their business with the most direct customer overlap and divest them into a new entity, then the harmful effects of the consolidation will be offset by the creation of a “new” competitor or the strengthening of an existing one. And they devised a detailed plan they promise will cure all potentially anti-competitive outcomes: sell 418 mostly West Coast stores, a few distribution centers, and some of their grocery brands to a shadowy, family-run New Hampshire concern called C&S Wholesale. The two parties coalesced around a compelling story, of two survivors joining forces in a death fight against the same unstoppable forces that had destroyed department stores and Toys ‘R’ Us and anyone who competed with Amazon. More from Maureen Tkacik | Claire Kelloway Albertsons tempered its aggressive markups overall grocery inflation, an astonishing 13.5 percent year over year when the merger was announced, eased to 3 percent. Kroger hired John Boehner and a former executive director of the Congressional Black Caucus to mollify the Capitol Hill backlash, and won a critical endorsement from Sen. In the meantime, the two companies are attempting to quietly change the narrative about themselves and the industry they’re trying to dominate. Kroger and Albertsons were a huge part of the reason public approval of the grocery industry plummeted 14 points to 40 percent in the year leading up to the merger announcement.īut Albertsons and Kroger did one shrewd thing: They set the timeline for closing the transaction so far into the future that the overburdened Federal Trade Commission could take its time deciding whether and how to challenge the merger. Separately, the two companies each control thousands of stores together, they generate nearly a quarter-trillion dollars in annual sales. This week marks the first anniversary of one of the dumber business deals of the past few years not involving Elon Musk: the proposed merger of Kroger and Albertsons, two massive supermarket rollups at the vanguard of the debate over greedflation. If you know of a rollup like this, contact us at rollups(at). This story is part of a Prospect series called Rollups, looking at obscure markets that have been rolled up by under-the-radar monopolies. Kroger CEO William Rodney McMullen speaks during a Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights hearing on the proposed Kroger-Albertsons grocery store merger, at the Capitol in Washington, November 29, 2022.
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