Senators grill Kroger and Albertsons CEOs over grocery megamerger

The top Democrat and Republican on the Senate’s antitrust committee led a grilling of the CEOs of Kroger and Albertsons on Tuesday over their planned $25 billion grocery megamerger, which comes after months of rising inflation that has hit consumers hard. 

“The companies assure us that this is the merger that will make everything better,” said Sen. Mike Lee (R-Utah), ranking member of the Senate Judiciary Subcommittee on Competition Policy, Antitrust and Consumer Rights.

“They have announced commitments to spend $500 million to lower prices. $1.3 billion to update their stores, and a billion dollars to increase employee wages. Of course, they haven’t explained how we can be sure that these commitments will actually be fulfilled,” he added. 

Unions and progressive advocacy groups have also raised concerns that the merger would raise prices, cut jobs and exacerbate inequality in food access through the closing of more locations. Those groups have urged the Biden administration to block the deal. 

Kroger CEO Rodney McMullen told the committee that these investments into lowering grocery prices and increasing wages for employees would be spread out in a four-year time frame. 

“By merging with Albertsons as an example,” McMullen said. “We’ll be able to have that positive impact and really further grow on what both of our companies have done individually.”

Vivek Sankaran, Albertsons’s CEO, pointed to the way in which the “completely transformed” marketplace for groceries has increased consumer competition. 

“The best way to compete with mega stores like Walmart and highly capitalized online companies like Amazon, will be through a merger with Kroger,” Sankaran said.

Lee also pointed to Albertsons’s $9.2 billion purchase of Safeway in 2015, in which one of the conditions was them having to divest over 100 of their stores. However, the company who bought those divested locations soon went bankrupt, leading to Albertsons buying the companies back at a discounted price. 

“Hollywood couldn’t write a more cynical plot, not if it tried,” Lee said. “Yet the companies assure us that this is the merger that will make everything better.”

Sen. Amy Klobuchar (D-Minn.), the subcommittee chair, said the merger is an example of the need for more funding for antitrust enforcement agencies. 

“To make sure they can do their job, we need to make sure they have the funding they need,” she said, also raising concerns about how Kroger’s promises would be enforced.  

Sens. Tom Cotton (R-Ark.) and Josh Hawley (R-Mo.) pressed McMullen over a religious discrimination case between the grocery giant and two former employees who were eventually fired for refusing to wear a uniform with a logo that they thought violated their religious beliefs. 

“I personally am not aware of this,” McCullen said, to which Hawley responded, “How is that possible? You’re being sued by the federal government. You have settled on a suit, and you don’t know about it?”