The ongoing battle between Kroger and Albertsons and the Federal Trade Commission (FTC) over their proposed merger is shaping up to be one of the most significant antitrust cases in recent retail history. As the FTC argues its case, a glance across the Atlantic offers a cautionary tale of what could happen if such mergers are denied—the struggles of European supermarkets like Asda provide a stark reminder of the potential pitfalls.
A Tale of Two Markets
In the United States, Kroger and Albertsons argue that their merger is critical to competing against retail behemoths like Walmart and Amazon. Without it, they claim, the fragmented supermarket industry could struggle to sustain competitive pricing, innovation, and supply chain efficiency. While the FTC seeks to preserve competition, critics warn that blocking the merger could lead to the kind of stagnation and decline observed in parts of Europe.
Take Asda in the UK, for example. Once one of the country’s leading supermarket chains, Asda has been fighting a tough battle in a fiercely competitive market. Following the failure of its proposed merger with Sainsbury’s in 2019—a deal blocked by the UK’s Competition and Markets Authority (CMA)—Asda faced immense pressure from discount retailers Aldi and Lidl. Unable to achieve the economies of scale needed to compete effectively, Asda has struggled to maintain market share, cut costs, and deliver value to customers.
Lessons from Europe
The European supermarket landscape is littered with similar stories. Across the continent, consolidation has often been viewed with suspicion, leading to blocked deals and rigid regulatory frameworks. However, this approach has not always benefited consumers. Many mid-tier supermarkets have found themselves squeezed between discounters on one side and premium retailers on the other, unable to invest in the technology, logistics, and pricing strategies needed to stay competitive.
In France, Carrefour’s market dominance has been challenged by nimble discounters like Leclerc and Aldi, while Germany’s Edeka and REWE have had to innovate rapidly to fend off price wars. Without mergers to bolster their scale and resources, many European supermarkets have been forced into reactive, rather than proactive, strategies—a lesson the U.S. market cannot afford to ignore.
The Risks of Standing Still
If the FTC succeeds in blocking the Kroger-Albertsons merger, it risks creating an environment where neither chain can adequately compete against dominant players like Walmart or tech-driven disruptors like Amazon. Both Kroger and Albertsons could find themselves unable to achieve the scale needed to innovate in key areas such as supply chain optimisation, online grocery delivery, and sustainability—areas that are increasingly shaping the future of retail.
This decision also has broader implications. A fragmented market may temporarily preserve competition, but it can also lead to stagnation, higher prices, and less choice for consumers in the long term. The U.S. risks repeating the mistakes seen in Europe, where excessive caution in allowing mergers has, in some cases, stifled growth and innovation.
A Delicate Balancing Act
The FTC’s role is undeniably critical in protecting consumers and ensuring fair competition. However, its approach to the Kroger-Albertsons case must also consider the broader dynamics of the retail industry. The global supermarket landscape is changing rapidly, with technological advancements, evolving consumer preferences, and supply chain disruptions creating new challenges.
The lessons from Europe are clear: while competition is essential, scale is equally critical in today’s retail environment. As the FTC deliberates its next move, it must weigh the risks of inaction against the potential benefits of allowing two major players to join forces.
If the FTC blocks this merger, it may win the battle but lose the war for a competitive, innovative, and consumer-focused supermarket industry in the long run.
