Warren, Sanders, Schakowsky to FTC: Oppose Kroger-Albertsons Deal
“Given the parties’ records of raising food prices for consumers and cutting benefits to workers to pad their own profits, and the unusual circumstances of a $4 billion dividend payment that will be paid out by Albertsons in early November, the FTC should oppose this proposed merger.”
Washington, D.C.— United States Senators Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) and Representative Jan Schakowsky (D-Ill.) sent a letter to Federal Trade Commission (FTC) Chair Lina Khan urging the agency to oppose Kroger’s proposed $24.6 billion acquisition of Albertsons. In the letter, the lawmakers highlight how Kroger and Albertsons have price gouged consumers during the pandemic, and how this merger could increase monopoly power, buyer power, and hurt both companies’ workers and consumers. The lawmakers also raised concerns about an unusual $4 billion dividend payout by Albertsons that is part of the deal.
“Kroger’s and Albertsons’ histories of aggressive profiteering during the pandemic present a dangerous roadmap for how a larger and more powerful company would act if this acquisition were allowed to proceed,” wrote the lawmakers. “The FTC, when evaluating the potential market and consumer effects of the Kroger-Albertsons acquisition, should closely consider both companies’ history of monopoly, labor, and consumer abuses, and whether this acquisition would exacerbate these abuses for American families.”
Kroger and Albertsons have both faced allegations of unfair labor practices and unsustainable conditions for their employees – concerns that could be compounded by this merger. Thousands of Albertsons and Kroger workers have gone on strike for better conditions in several states in just the past year alone. The decrease in benefits for employees – who saw their “hero pay” from the pandemic end after just three months – coincided with skyrocketing executive bonuses and billions of dollars in buybacks for shareholders.
“The FTC should, when evaluating the impact of a potential merger, examine Kroger’s and Albertsons’ records of raking in profits and providing massive payouts for executives and big shareholders while putting their frontline employees at risk for little pay and low benefits,” wrote the lawmakers. “Kroger’s and Albertsons’s high combined market shares in certain geographic markets would give the new company significant leverage to continue these harmful trend for workers.”
Early in the pandemic, both companies faced allegations of price-gouging. A lawsuit filed in Texas alleged that 19 grocery stores, including Kroger and Albertsons, participated in price-gouging in the first months of the pandemic, nearly tripling the price of eggs during the state of disaster in March 2020. In 2021, Kroger and Albertsons continued to raise their prices, citing rising costs and inflation, even as they reassured investors that their businesses stood to benefit. In June 2021, on a call with investors, Kroger CEO Rodney McMullen admitted that “our business operates the best” with some inflation, allowing the company to raise prices and boost profits at the expense of consumers.
In addition, lawmakers caution that Albertsons’ proposed $4 billion dividend to shareholders may weaken Albertsons’ ability to compete regardless of whether the acquisition is finalized and may constitute “gun jumping,” a form of collusion illegal under the Sherman Act.
“If the merger is approved, the $4 billion payout will weaken both the merged entity and the new SpinCo company, saddling those companies with excess debt rather than allowing them to invest in workers, improving stores, or reducing prices for customers,” concluded the lawmakers.
As a champion for consumers and fair markets, Senator Warren has urged regulators to use every tool available to combat market concentration, monopolies, and anticompetitive practices across every sector of the economy:
- Last month, Senator Warren, along with Representatives Mondaire Jones (D-N.Y.), Katie Porter (D-Calif.), Mark Pocan (D-Wisc.), Pramila Jayapal (D-Wash.), and Jesús “Chuy” García (D-Ill.), sent a letter to the FTC calling on the agency to oppose Amazon’s proposed $1.65 billion acquisition of iRobot, raising concerns about Amazon’s anticompetitive practices that put consumers and their privacy at risk.
- In September 2022, Senator Warren sent a letter to Secretary of Transportation Pete Buttigieg, urging the Department of Transportation to use its full statutory authority to address consolidation in the airline industry and expressing serious concerns about the proposed merger between JetBlue and Spirit Airlines.
- In June 2022, as the country faced an infant formula crisis, Senators Warren, Cory Booker (D-N.J.), and Bernie Sanders (I-Vt.) and U.S. Representative Katie Porter (D-Calif.) sent a letter to Jonathan Kanter, Assistant Attorney General for the Department of Justice Antitrust Division, expressing skepticism regarding a bid from a private equity firm to acquire the Enfamil infant formula manufacturing arm of Reckitt Benckiser Group and how such a transaction, amid the nation’s ongoing infant formula shortage, could harm competition or prolong this crisis.
- In May 2022, Senators Warren and Mike Rounds (R-S.D.) introduced a bipartisan joint resolution that would direct the FTC to report to Congress within one year on the extent of anti-competitive practices and violations of antitrust law in the beef-packing industry, including price-fixing, anti-competitive acquisitions, dominance of supply chains, and monopolization.
- On March 16, 2022, Senator Warren introduced the Prohibiting Anticompetitive Mergers Act to help stomp out rampant industry consolidation that allows companies to raise consumer prices and mistreat workers. The bill would ban the biggest, most anticompetitive mergers and give the Department of Justice and FTC the teeth to reject deals in the first instance without court orders and to break up harmful mergers.
- In March 2022, Senator Warren and Representative Jones, along with Senators Ben Ray Luján (D-N.M.) and Bernie Sanders (I-Vt.), and Representatives Rashida Tlaib (D-Mich.), Porter, Jan Schakowsky (D-Ill.), and Alexandria Ocasio-Cortez (D-N.Y.) sent a letter to Jonathan Kanter, Assistant Attorney General for the Antitrust Division and Transportation Secretary Pete Buttigieg, expressing concerns about Frontier Airlines’s proposed acquisition of Spirit Airlines.
- In February 2022, Senator Warren and Representative Jones led their colleagues to slam the proposed merger between Sanderson Farms, the third largest poultry processor, and Wayne Farms, the sixth largest poultry processor, and called on the Department of Justice to thoroughly review the deal and step in to prevent harm to American farmers and consumers.
- In February 2022, at a hearing, Senator Warren called out corporations for abusing their market power to raise consumer prices and boost profits.
- In February 2022, Senator Warren requested the Department of Justice to take aggressive action against corporations violating antitrust laws to hike prices for consumers.
- In January 2022, Senator Warren questioned Federal Reserve nominee Lael Brainard about market concentration and price gouging driving inflation.
- At a hearing in January 2022, Senator Warren pressed Fed Chair Jerome Powell on the role of corporate concentration in driving up prices for consumers during his renomination hearing to be Chair of the Board of Governors of the Federal Reserve System.
- In December 2021, Senator Warren and Representatives Joaquin Castro (D-Texas), David Cicilline (D-R.I.), Jayapal and 29 other Members of Congress sent a letter to the Department of Justice, calling on it to investigate the proposed $43 billion merger of Discovery and WarnerMedia for violations of antitrust laws.
- In November 2021, Senator Warren requested the Department of Justice to investigate the poultry industry's anticompetitive behavior as turkey and chicken prices soar.
- In June 2021, Senator Warren called on the FTC to engage in a “broad” and “meticulous” review of Amazon's acquisition of Metro-Goldwyn-Mayer Studios (MGM) consistent with Section 7 of the Clayton Act, expressing concerns that the acquisition has the potential to harm consumers and workers, and reduce innovation.
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