Fact: A Win for Customers, Communities and Associates

Myth

The merger will result in store closures.

Fact

Kroger, Albertsons, and C&S have made for firm public commitments that NO STORES will close as a result of the merger.1

Myth

This merger will cause layoffs.

Fact

Kroger, Albertsons, and C&S have made for firm public commitments to protect worker pay and benefits, including ZERO job losses for all frontline associates.2

Frontline workers will gain from $1 billion in increased wages and benefits.3

Myth

This merger will raise prices.

Fact

Kroger will invest $1 billion in lower prices4 and has a proven track record of lowering prices following other transactions, such as Harris Teeter and Roundy's5. This deal will ultimately benefit consumers as they will have access to more choices and lower prices.

Myth

The largest and second largest grocery companies are merging.

Fact

Walmart is the country's largest grocer by a wide margin with a 29% U.S. grocery market share.6

Costco's U.S. grocery business is over 40% larger than Albertsons.

Kroger is fourth in revenue behind Walmart, Amazon, and Costco and will continue to be fourth after the merger.7

Myth

This merger will result in fewer pharmacies and create "pharmacy deserts" in underserved areas.

Fact

Kroger and C&S have made firm public commitments that all pharmacies in acquired and divested stores will continue to operate the same as they do now.8

Kroger has invested heavily in operating pharmacies throughout the country, including underserved areas,9 and both Kroger and C&S have track records of feeding people and providing retail health services.

Myth

Store divestitures do not work and will only result in store closures.

Fact

C&S, which has made a firm public commitment that no stores will close as a result of the merger, is a strong, well-capitalized corporate buyer with experience in managing complex supply-chain operations for the stores it operates throughout the country as well as the more than 7,700 independent grocers that it supplies with food daily.10

C&S will also acquire rights to continue using the banners that consumers trust.11

Myth

Grocers like Kroger and Albertsons are to blame for food inflation.

Fact

The primary causes of current food inflation are the Covid-19 pandemic, the ongoing war in Ukraine, labor shortages, and food manufacturers passing on cost increases.12

Kroger has consistently invested in lower prices and maintained remarkably slim profit margins (as small as 1 or 2% in a good year) due in part to extreme price competition from larger national and discount grocers and an unprecedented degree of choice and price transparency available to consumers.13

  1. Kroger and Albertsons Companies Announce Comprehensive Divestiture Plan with C&S Wholesale Grocers, LLC in Connection with Proposed Merger, Kroger (Sep. 8, 2023), https://ir.kroger.com/news/news-details/2023/Kroger-and-Albertsons-Companies-Announce-Comprehensive-Divestiture-Plan-with-CS-Wholesale-Grocers-LLC-in-Connection-with-Proposed-Merger/default.aspx.
  2. Id.
  3. Id. ([Kroger] committed to investing $1 billion in improving associates' wages and comprehensive benefits post close.")
  4. Nathan Bomey, "Kroger pledges to reduce prices after Albertsons deal," Axios (Oct. 14, 2022), https://www.axios.com/2022/10/14/kroger-albertsons-deal-merger-prices.
  5. Following its 2015 acquisition of Wisconsin-based Roundy’s Supermarkets, Kroger invested hundreds of millions into lowering prices. See Joe Taschler, “The battle over where you get your food is about to intensify, as Kroger cuts prices.” Milwaukee Journal Sentinel (Aug. 8, 2018), https://www.jsonline.com/story/money/business/2018/08/08/kroger-cutting-grocery-prices-wisconsin-stores/923165002/. Additionally, Kroger’s gross margins have declined over the past 20 years, while it has simultaneously invested billions in better prices over that same timeframe.
    See generally Jinjoo Lee, “Kroger’s Modest Margins Could Become a Strength,” The Wall St. Journal (Dec. 2, 2021), https://www.wsj.com/articles/krogers-modest-margins-could-become-a-strength-11638473147.
  6. For a complete overview of the grocery industry, see krogeralbertsons.com and "U.S. Grocery - A Few Things You Might Not Know." https://assets.website-files.com/63128e32f4c52f8fbaea44ef/6531677db44077c7775adefe_U.S.%20Grocery%20-%20A%20Few%20Things%20You%20Might%20Not%20Know.pdf
  7. "Written Testimony of Rodney McMullen, Chair and CEO, The Kroger Co. Before The Senate Committee On the Judiciary, Subcommittee on Antitrust, Competition, Policy and Consumer Rights" (November 29, 2022) https://www.judiciary.senate.gov/imo/media/doc/Testimony%20-%20McMullen%20-%202022-11-28.pdf
  8. Russell Redman, “Kroger-Albertsons: The pharmacy question,” Winsight Grocery Business (Aug. 25, 2023)(“Kroger Chairman and CEO Rodney McMullen said no stores would be closed as a result of the deal…[and] that pharmacies would remain part of both acquired and divested stores.”), https://www.winsightgrocerybusiness.com/retailers/kroger-albertsons-pharmacy-question.
  9. “Governor Lee, Commissioner McWhorter Announce The Kroger Company to Establish Distribution Operations in Cleveland,” Tennessee Department of Economic and Community Development (Aug. 21, 2023), https://www.tn.gov/ecd/news/2023/8/21/governor-lee--commissioner-mcwhorter-announce-the-kroger-company-to-establish-distribution-operations-in-cleveland.html.
  10. At the time of the Albertsons/Safeway merger divestitures, Haggen was a nearly bankrupt, 18-store chain that bought 146 stores (a business eight times its size), was unknown in the new markets, had a weak balance sheet and lacked integration experience. C&S is well-capitalized, one of the largest private companies in the U.S., will retain existing ACI banners, has extensive integration experience and was validated by the FTC just two years ago as a strong divestiture acquirer. See Brain C. Albrecht et al., “Food-Retail Competition, Antitrust Law, and the Kroger/Albertsons Merger,” International Center for Law & Economics at 25-27 (Oct. 17, 2023), https://laweconcenter.org/resources/food-retail-competition-antitrust-law-and-the-kroger-albertsons-merger/.
  11. Russell Redman, “Kroger-Albertsons merger divestiture to C&S called ‘adequate remedy,’” Winsight Grocery Business (Oct. 18, 2023), https://www.winsightgrocerybusiness.com/kroger/kroger-albertsons-merger-divestiture-cs-called-adequate-remedy.
  12. “Grocery Inflation is Finally Showing Signs of Cooling,” Council of Economic Advisors (June 16, 2023) (noting that food inflation is driven by a variety of factors, none of which include grocer activity to intentionally inflate prices), https://www.whitehouse.gov/cea/written-materials/2023/06/16/grocery-inflation/.
  13. Specifically, Kroger and Albertson’s LTM net income margins are 1% and 2%, respectively. See also Scott Moses, “12 things you might not know about the U.S. grocery industry,” Supermarket News (Sep. 26, 2023), https://www.supermarketnews.com/retail-financial/12-things-you-might-not-know-about-us-grocery-industry.