The FTC Steps in

Marketing and Business in the World 

Introduction

    The Federal Trade Commission (FTC) is a government agency in charge of protecting consumers from business practices deemed unfair and step in if needed to engage process like breaking up monopolies or stopping mergers that would be bad for consumers. Albertsons and Kroger are both independent grocery chains that have done very well and have locations and employees all around the world.

The Supermerger

    There was recently a bid for a merger between two of the supermarket giants, Albertson's and Kroger. This is the largest supermarket merger in history coming in at a cost of a whopping 25 billion dollars. Once this was announced, the Federal Trade Commission swiftly moved to sue them to block this specific merger saying it would be anti-consumer. There have been many voices speaking out against the merger including senators Elizabeth Warren and Bernie Sanders who had specific concerns about pricing among our time of higher inflation.

    It is important to consider that not every lawsuit by the FTC to block a merger or acquisition ends with a victory. For example, Microsoft announced their intent to purchase the gaming goliath of Activition-Blizzard for 75 billion dollars in 2022. It was not until a year later in 2023 that they were actually able to conclude the sale because the FTC moved to block it. There was long trial where Microsoft had to prove that the move would not be bad for consumers. While not every suit ends in a complete blocking of a move, they usually get the company to make many concessions and promises to the government to keep them in check. So no matter what it is a good idea for the protection of consumers for the FTC to step in because even if they cannot block a deal entirely, they can still make sure that the company is not up to anything nefarious. 

How does this effect me?

    With this specific merger, there is a lot to worry about when it comes to consumer protections. The merger of two grocery chains of this size are unprecedented so we do not know the exact implications if this were to go through. However, we can look to the arguments that the FTC is making as to why this merger would be bad for consumers. These chains combined clock in at over 700,000 employees and over 10,000 stores. Furthermore, many cities have only these two stores as their grocery options. So if these two chains merge, they will effectively eliminate their competition with each other. If you are one of many people who live in a town with only these stores, you will see prices rise rapidly as they will have no one to compete with for customers. 

    Additionally, if you are one of the 700,000 employees effected, you are also negatively effected by this merger. For example, if you work at Albertson's and they are treating you poorly, it would be a logical next step to maybe quit and switch to a Kroger with the hopes for better wages or working conditions. However, if this merger goes through, there simply won't be another store to quit and move to. 

Conclusion

    Overall, this is quite a negative merger for consumers and, if allowed to go through, could lead to high grocery prices and worse working conditions for employees. The FTC is doing everything they can to stop the merger and being the voice of the consumer. We will have to see how this shakes out, but as we saw from the Microsoft-Activition acquisition, we may have to wait quite a while to see how this case breaks down.