OPINION: Public is better off without grocery chain merger

This editorial was published in The Columbian of Vancouver, Wash.

In the long run, the demise of a proposed merger between Albertsons and Kroger will benefit consumers and employees.

In separate rulings Tuesday, a federal judge in Oregon and a state judge in Washington blocked the merger between two of the nation’s largest grocery chains. On Wednesday, Albertsons officials withdrew from the proposal and filed a lawsuit against Kroger. While much legal wrangling remains, it is not too early to examine the situation and its vast impact on Washington shoppers.

Albertsons owns Safeway, and Kroger owns Fred Meyer and QFC. Between them, the companies operate 330 stores in Washington, including 21 in Clark County. While there are plenty of Walmart, WinCo and Costco outlets, along with higher-end stores such as Chuck’s Produce, Trader Joe’s and Whole Foods, most neighborhood grocery outlets fall under the Albertsons or Kroger brands — even if the name on the front of the store says otherwise.

In issuing a temporary injunction, U.S. District Judge Adrienne Nelson said allowing the chains to merge would reduce competition while raising the cost of food and other staples.

“The Court finds that both qualitative and quantitative evidence shows that defendants engage in substantial head-to-head competition and the proposed merger would remove that competition,” Nelson wrote. “As a result, the proposed merger is likely to lead to unilateral competitive effects and is presumptively unlawful.”

Meanwhile, in King County Superior Court, Judge Marshall Ferguson wrote “the evidence convincingly shows that the current competition between Kroger and Albertsons stores is fierce in the State of Washington.”

Representatives of Albertsons and Kroger argued that the merger is necessary for the stores to compete with big-box outlets such as Walmart and Costco. But their actions belie that assertion.

Shortly after the proposal was announced in 2022, Albertsons provided a $4 billion “special dividend” payment to shareholders. Rather than acting in the best interests of consumers and employees, the company demonstrated that the concerns of shareholders were more important than the communities served by the stores.

That speaks to larger issues within the U.S. economy and ongoing legal conflicts between consumers and major corporations. Those conflicts are represented by the lessons learned — and lessons ignored — from the Great Recession of 2008 and the creation of the Consumer Financial Protection Bureau.

The bureau, which oversees financial institutions, has been the target of Republican backlash since its creation. As The Hill (a Washington, D.C., media outlet) explained this week, “The powerful financial watchdog agency is in for a reckoning during a second Trump administration, which will likely take steps to curb its power and regulatory agenda.”

Rolling back oversight and tepidly enforcing antitrust laws might provide financial benefits for investors, but it chips away at the middle class that forms the foundation of the American economy.

As columnist Michael Hiltzik of the Los Angeles Times wrote: “It should be obvious by now that the driving force of many corporate mergers, if not most or even all mergers, is the goal of enriching insiders. The pending merger of supermarket giants Albertsons and Kroger, however, injects that impulse with steroids.”

The court rulings and subsequent demise of the merger protect the public from the negative impact that would have resulted.

TNS