Kroger and Albertsons CEOs head to Capitol Hill

The U.S. Senate this afternoon will hold an antitrust subcommittee hearing on Kroger's proposed $24.6 billion purchase of rival Albertsons, including testimony from each company's CEO.

Why it matters: This is where Kroger and Albertsons will flesh out, and defend, their arguments in favor of a merger that could directly impact tens of millions of Americans.

• The Federal Trade Commission, which is said to already have begun private conversations with Kroger, will keep a close eye on the proceedings.
• It's a high wire act for the CEOs, who must persuasively parrot their antitrust attorneys' talking points without stumbling. And they're unlikely to get much breathing room from either political party, as food security is a bipartisan issue.

What to expect from the CEOs: More details on some of the top-line promises made in the original merger announcement, particularly around store closures and jobs. Plus a data-driven argument that their industry is undergoing rapid change, with independent grocers and online platforms taking increased market share.

• Kroger also will emphasize that its gross margins have remained relatively stable, and narrow, despite its significant revenue ad store footprint growth.
• It also may mention inbound acquisition interest for stores it plans to divest.

What to expect from Senators: Lots of questions about pricing power. If margins haven't increased as Kroger has grown, why are the companies pledging lower product prices for consumers? And won't there be an anticompetitive impact on vendors, let alone on rival grocers who can't exert the same sort of pricing leverage?

• There also could be discussion of that $4 billion dividend that Albertsons is seeking to pay shareholders like Cerberus, which the companies said was related to the merger until they said it wasn't.

• The subcommittee is co-chaired by Sens. Amy Klobuchar (D-MN) and Mike Lee (R-Utah).

Other hearing witnesses will include a tech competition researcher for Consumer Reports, a University of Maryland economist and the CEO of a small Ohio grocer.

• Elsewhere today, labor unions representing over 100,000 Kroger and Albertsons workers will hold a Capitol Hill press conference to detail what they describe as the merger's "devastating" consequences.

The bottom line: The fate of Kroger-Albertsons will be determined by regulators, not legislators. But today's hearing will help set the stage for those future deliberations.