Kroger-Albertsons merger update: NGA ‘pleased’ by new proposed FTC guidelines
As the legal process continues in the proposed merger of grocery retail powerhouses The Kroger Co. and Albertsons Cos., independent grocers are encouraged that government officials are prioritizing the effects of such mergers on buyer power.
The Federal Trade Commission and Department of Justice released July 19, a proposed update to its merger-enforcement guidelines, including more scrutiny on buyer power, according to a news release.
“[The National Grocers Association] is pleased to see federal antitrust enforcers take seriously the competitive concerns that arise when dominant firms abuse their buyer power to impose discriminatory terms on their rivals,” Chris Jones, NGA government relations and counsel senior vice president, said in the release. “NGA and its members have consistently warned federal antitrust officials about how U.S. consumers are worse off due to buyer power abuses in an increasingly consolidated grocery sector," Jones said. "This problem has been laid bare by pandemic-era supply chain disruptions and increasing food price inflation, where independent grocers have been put at critical disadvantage relative to their dominant competitors, especially those who serve rural and urban communities.”
Washington, D.C.-based NGA is the national trade association representing the retail and wholesale community grocers that comprise the independent sector of the food distribution industry.
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Four national grocery retailers account for 69% of all U.S. grocery sales, according to Food and Water Watch, a Washington, D.C.-based non-governmental organization group that lobbies for corporate and government accountability in food, water and corporate overreach. Two of these top four retailers, Kroger and Albertsons, submitted plans to federal enforcers to merge by early 2024.
NGA is still reviewing the full impact of the proposed merger guidelines on the independent supermarket sector and will provide comments to the updated draft guidelines ahead of the deadline, which closes in 60 days.
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Earlier in July, at a House Judiciary Committee hearing, U.S. Rep. Thomas Massie, chairman of the Antitrust Subcommittee, said his constituents aren’t contacting him about mergers of tech companies. However with food, it’s another story.
“But one thing I’ve been contacted about multiple times is the small independent grocers feel like there are monopolistic practices being used against them,” he said in a July 18 news release.
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The proposed draft significantly re-writes merger enforcement standards to include new considerations for mergers that enhance buyer power. Specifically, one of the 13 proposed guidelines directly addresses buyer power (i.e., monopsony power) where a merger of competing buyers lessens competition for other sellers.
The proposed changes mark a significant shift in merger enforcement to incorporate the concerns that the NGA brought forth to federal enforcers.
In comments submitted to the FTC and DOJ in April of 2021, NGA urged the agencies to consider how dominant firms use their bargaining leverage to impose discriminatory terms on their rivals. NGA outlined how dominant food retailers enjoy a substantial advantage over rivals with their ability to squeeze grocery suppliers for more favorable terms, including through price, promotions, payment terms and product availability.
In a significant shift, the proposed guidelines issued July 19 strongly consider how buyer power impacts competition amongst rival firms, NGA said, which is a strong contrast to the current guidelines that largely ignore how buyer power abuses impact competition.
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