The CEO of Kroger, Rodney McMullen, defended the proposed merger with rival Albertsons during a federal court hearing, claiming that combining the two companies would result in lower prices for consumers and stronger competition against retail giants like Walmart and Amazon. McMullen’s testimony, delivered in Oregon, comes as the U.S. government seeks an injunction to block the $24.6 billion merger, which would be the largest grocery chain consolidation in U.S. history.
Kroger and Albertsons first announced the merger in October 2022, with Kroger agreeing to buy Albertsons. However, the Federal Trade Commission (FTC) filed a lawsuit earlier this year, arguing that the deal would reduce competition, drive up grocery prices, and negatively impact wages for unionized workers in both companies.
McMullen countered these claims by pointing out that Albertsons’ prices are 10-12% higher than Kroger’s, and the merger would help bring those prices down. He insisted that combining the two companies would result in cost savings that could be passed on to consumers. “The day we merge is the day we begin lowering prices,” McMullen said in court.
Kroger, headquartered in Cincinnati, operates 2,800 stores across 35 states, while Albertsons, based in Boise, Idaho, has 2,273 stores in 34 states. Together, the companies would control approximately 13% of the U.S. grocery market, a far cry from Walmart’s 22% dominance. They also employ around 710,000 workers combined, making the impact of the merger far-reaching.
The FTC’s case hinges on the argument that the merger would eliminate competition in 22 states where the two supermarket chains currently compete. FTC attorneys argue that this competition benefits consumers through competitive pricing, high-quality private-label products, and services like grocery pickup. Removing this rivalry, they claim, could lead to higher prices and reduced services.
While some experts support the FTC’s concerns, others disagree. Anthony Dukes, a marketing professor at USC, expressed skepticism, suggesting that the merger could actually lead to cost savings that benefit consumers through lower wholesale prices. “I’m not convinced the FTC’s argument is necessarily accurate,” he told CBS News.
Despite assurances from Kroger and Albertsons that prices will fall, many consumers remain focused on their grocery bills. According to Leo Feler, chief economist at Numerator, the rising cost of living has made grocery shopping a source of stress for many families. “Consumers are seeing price hikes on essentials like eggs, bread, and chicken,” Feler explained, “and they’re right to feel it’s expensive.”
The merger has also drawn criticism from labor unions, which fear it will lead to wage cuts and store closures, potentially creating “food deserts” in underserved communities. However, Albertsons has argued that the deal would actually strengthen union jobs, as many of their competitors, like Walmart, have few unionized workers.
As the court hearing progresses, the testimonies of both McMullen and Albertsons CEO Vivek Sankaran will play a crucial role in determining the outcome of this historic merger. Whether the deal results in lower prices or further consolidation of the grocery market remains to be seen, but the stakes are high for consumers and workers alike.