A little more than a year has passed since the Federal Trade Commission (FTC) moved to block the proposed $25 billion merger between Kroger and Albertsons, the two largest traditional supermarket chains in the United States. The deal, first announced in 2022, was intended to create a retail powerhouse capable of competing with Walmart, Amazon, and Costco in an increasingly consolidated grocery landscape. However, the FTC’s intervention brought the plan to a dramatic halt in early 2024, citing concerns that the merger would reduce competition, raise food prices, and harm both consumers and workers.
The fallout from that decision has been complex. Both companies now find themselves in a web of lawsuits, accusations, and strategic reassessments. What was once framed as a merger of equals has become a case study in how antitrust authorities — particularly under the Biden administration — are reshaping corporate strategies across industries. The question now is not just what went wrong, but what comes next for Kroger, Albertsons, and the supermarket industry as a whole.
1. Kroger and Albertsons Turn from Partners to Rivals in Court
In the months following the FTC’s decision, tensions between Kroger and Albertsons have only intensified. Initially aligned in their goal of pushing the merger through, the companies began to blame each other after the deal’s collapse.
Albertsons alleged that Kroger did not do enough to address antitrust concerns or to engage constructively with regulators. According to sources close to the company, Albertsons executives felt Kroger failed to propose stronger remedies — such as more aggressive divestitures of stores — to win over the FTC. Kroger, on the other hand, contended that they had made significant concessions, including their controversial plan to sell hundreds of stores to C&S Wholesale Grocers as a way to preserve competition. The FTC, however, viewed that plan as inadequate, arguing that C&S might not be able to maintain those divested stores as effective competitors in the long run.
Once it became clear the deal was dead, both companies began to pursue legal action. Kroger moved to recover expenses and damages associated with the failed merger, while Albertsons sought compensation for what it described as Kroger’s “failure to act in good faith.” The resulting dueling lawsuits underscore just how far apart the two former partners have drifted — and how high the stakes were for both.
2. The FTC’s Broader Message: A Line in the Sand
The blocking of the Kroger–Albertsons merger was more than just a single deal being challenged. It was also an unmistakable signal from the FTC under Chair Lina Khan, whose approach has reshaped the U.S. competition policy landscape.
Khan’s FTC has aggressively questioned mergers that could concentrate market power, especially in industries where competition already appears thin. Grocery retail, dominated by a handful of regional and national players, is one such market. The FTC argued that allowing Kroger and Albertsons to merge would reduce competition in nearly 2,800 local markets, potentially leading to higher prices, fewer choices for consumers, and weaker bargaining power for workers.
Critics of the merger also pointed to labor considerations — an emerging factor in modern antitrust enforcement. Grocery workers, represented by the United Food and Commercial Workers (UFCW) union, feared that consolidation could lead to layoffs and reduced wage competition.
This case reinforced a broader truth: large-scale mergers among U.S. supermarkets face an uphill regulatory battle. Any chain considering a major combination must assume that the FTC — or, depending on timing, the Department of Justice — will demand detailed evidence that consumers will benefit rather than lose out.
3. A Strategic Pivot: The Search for Alternative Paths to Growth
So what happens now? If a straightforward merger is off the table, how can traditional supermarkets grow and compete in a market where e-commerce, inflation, and shifting consumer habits are transforming the grocery business?
There are several strategic paths being discussed within the industry.
a. Smaller or Regional Mergers
Rather than one giant deal, we may see a series of smaller, regionally focused mergers. By consolidating in limited geographic areas, companies can expand their reach without triggering the same antitrust alarms. For example, mid-tier chains like Hy-Vee, Meijer, or H-E-B could look at selective acquisitions in adjacent markets instead of nationwide combinations.
Smaller deals are easier to defend because they can be shown to increase efficiency or improve competition in certain underserved areas rather than reduce it.
b. Buying Power Alliances — the “Central d’Achat” Model
Another possibility borrows directly from European retail strategies — forming shared purchasing alliances, or “centrales d’achat,” as seen in France. Instead of merging ownership structures, companies collaborate to unify their buying power when dealing with suppliers.
These alliances allow grocers to negotiate better prices for bulk food, logistics, and technology without fully integrating corporate control. For instance, two supermarket chains might remain independent competitors on the shelf but collectively source national-brand products or shared distribution networks.
In France, Leclerc, Auchan, and Intermarché have all used such cooperative models to strengthen their market position against global suppliers. A similar approach could emerge in the U.S. as Kroger, Albertsons, and others look to improve margins without inviting regulatory opposition.
c. Operational Partnerships and Technology Sharing
Beyond buying power, supermarkets may start sharing technological infrastructure — such as data analytics platforms, digital loyalty programs, or last-mile delivery networks — through partnerships rather than mergers.
Kroger’s own innovations in data science and Albertsons’ investments in digital ordering systems could still be leveraged collaboratively, even if the companies don’t unite formally. The line between collaboration and consolidation is blurry but may represent the most practical compromise under current regulatory conditions.
4. The Changing Competitive Landscape
While Kroger and Albertsons recalibrate, competition from nontraditional grocery players continues to intensify. Walmart, Amazon (through Whole Foods and Amazon Fresh), and discount chains like Aldi and Lidl are all gaining market share.
These newer entrants aren’t burdened by the same traditional store networks or union structures as legacy grocers. They operate leaner supply chains and use technology-driven models to keep prices low and speed up logistics. This competitive pressure may push Kroger and Albertsons to innovate faster — merging or not.
One interesting trend is the rise of private-label brands. Retailers have discovered that by expanding their in-house product lines, they can control costs, differentiate their offerings, and capture customer loyalty. Even without merging, both Kroger and Albertsons can strengthen their profitability through private-label innovation and premiumization — a strategy that doesn’t require regulatory permission.
5. Investor and Consumer Implications
For investors, the merger’s collapse initially sparked uncertainty. Both companies had promised sizable cost savings and synergies — estimated at over $1 billion annually — that are now likely lost. However, analysts argue that avoiding prolonged legal battles and regulatory scrutiny might, in the long term, allow each company to refocus on efficiency and digital transformation.
For consumers, the near-term implications are minimal: lower consolidation means more competition between local supermarkets. But in the long term, the lack of scale could make it harder for traditional grocers to keep up with global players that enjoy massive purchasing power.
6. The Road Ahead
The Kroger–Albertsons debacle will likely shape how U.S. retailers approach mergers for years to come. Rather than bold, headline-grabbing mergers, the future of American grocery consolidation may unfold quietly — through partnerships, shared procurement efforts, digital joint ventures, and targeted regional acquisitions.
Supermarkets have learned a painful but valuable lesson: the FTC’s new antitrust philosophy is not a temporary policy stance but a structural shift in how competition is regulated. In a world where even moderate market concentration triggers alarm, creative cooperation will replace massive merger attempts.
A new era of restrained ambition has begun — not defined by size, but by collaboration, agility, and innovation. And while the dream of a Kroger–Albertsons giant may have vanished, the competitive fire of the U.S. supermarket industry is only being rekindled in a different form.