Oct 21, 2022 - Business

What a Kroger/Albertsons merger would mean for Valley shoppers

Data: Kroger; Map: Kavya Beheraj/Axios

A planned merger between Kroger and Albertsons would consolidate two of the biggest companies in the Valley's grocery store market.

Yes, but: It's unclear exactly what a merger would mean for Arizona shoppers.

Driving the news: Kroger, which owns Fry's Food Stores, and Albertsons, which owns Safeway, announced on Oct. 14 that they planned to merge, Axios' Nathan Bomey reported.

Why it's important: If federal officials don't block the merger, it would consolidate two of the most dominant grocery store chains in Arizona, which account for more than 40% of the market in the Valley and more than 44% statewide.

  • Albertsons operates 134 stores across the state, while Kroger operates 124, The Arizona Republic reported.
  • Walmart and Costco, the companies' next largest competitors, have a combined market share of about 26% in Arizona.

State of play: Attorneys who specialize in mergers and acquisitions had differing views of whether the proposal will be good or bad for consumers in the Valley.

What they're saying: "I think the bottom line is, is it going to drive down costs for your grocery bill and my grocery bill? … I think it would because of all of the efficiencies it's going to create," says Shruti Gurudanti, an attorney at Rose Law Group. "I do feel confident that the prices are going to be better because they have a better position to also negotiate the prices with their suppliers."

Yes, but: Gurudanti says she has some concerns that the merger could lead to job losses.

  • The companies said they're willing to divest up to 650 stores nationwide and could spin off 100-375 stores in a new entity.
  • If some of the stores that are divested or spun off are in the Valley, Gurudanti said, the number of jobs available could shrink.
  • Kroger is the state's fourth largest non-governmental employer, with about 21,070 employees, and Albertsons is tied for sixth largest, with 14,500 employees, according to rankings released by the Republic last month.

The other side: Charles Berry, an attorney with the Scottsdale office of the law firm Clark Hill, says Axios that he has concerns.

  • Berry says the market benefits from competition, which would be reduced if two companies with such a dominant combined market share merged.
  • He's skeptical that the consolidated company would be able to reduce costs for consumers because they're already large enough to order merchandise in a volume big enough volume to get favorable prices, especially Kroger.
  • He also worries about possible job losses.

What's next: The Federal Trade Commission (FTC) could block the merger, which U.S. Sens. Bernie Sanders and Elizabeth Warren are urging.

  • Other Democratic senators are raising antitrust concerns with the FTC, and Sen. Amy Klobuchar (D-Minn.), has scheduled a hearing on the matter.

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