FTC Wants to Block the $24.6 Billion Deal Which Would Combine Jewel and Mariano’s

Update: Added statement from Albertsons

The $24.6 billion deal between Albertsons, the parent company of Jewel; and Kroger, the parent company of Mariano’s now faces an objection from the federal government. On Monday, the Federal Trade Commission filed a lawsuit to block Kroger’s proposed acquisition of Albertsons, claiming grocery workers would make lower wages while customers would pay higher prices.

Illinois Attorney General Kwame Raoul was among seven state chief legal officers (and Washington, D.C.’s) who signed the FTC’s lawsuit. The deal, called the largest in American grocery store history, would create a company of 5,000 stores. Kroger, which operates stores in 36 states, claims it needs scale to compete with non-unionized stores like Amazon and Walmart.

“The proposed merger between Albertsons and Kroger would greatly reduce competition in the grocery market while leading to fewer choices for consumers and increased grocery prices at a time many families are struggling to keep up,” Raoul said in a news release. “Corporate profits and shareholder payouts should not come at the expense of consumers.”

A month after the deal was announced in November 2022, Raoul teamed up with attorneys general from California and D.C. on a lawsuit to halt a $4 million payout to Albertsons stakeholders before the FTC could complete its review. As reported by the Associated Press, the deal would create a new entity that would control about 13 percent of America’s grocery market while Walmart controls 22 percent, according to J.P. Morgan.

For Chicagoans, the future of Jewel and Mariano’s remains at stake. As Kroger would be buying Albertsons, the smart money is that Jewel, a retailer that’s been around since 1899, with 183 stores in the area, would be converted with the stock looking more like Mariano’s, a brand that’s been around since 2010 with 44 stores in Illinois. However, there’s no indication if the newly formed company would retain either the 125-year-old brand or the 14-year-old brand.

Kroger and Albertsons have offered to divest “select other assets to C&S Wholesale Grocers, which today operates just 23 supermarkets and a single retail pharmacy,” according to the FTC. That’s 413 stores, but that won’t satisfy the FTC: “The proposal completely ignores many affected regional and local markets where Kroger and Albertsons compete today,” the commission responded.

The FTC’s lawsuit isn’t surprising as the feds followed lawsuits filed in January on the state levels in Oregon and Colorado. New York private equity firm Cerberus Capital Management holds a 26 percent stake in Albertsons.

“Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today,” Henry Liu, director of the FTC’s Bureau of Competition said in a news release. “Essential grocery store workers would also suffer under this deal, facing the threat of their wages dwindling, benefits diminishing, and their working conditions deteriorating.”

On the afternoon of Tuesday, February 28, an Albertsons rep reached out with this statement:

Albertsons Cos. merging with Kroger will expand competition, lower prices, increase associate wages, protect union jobs, and enhance customers’ shopping experience. If the Federal Trade Commission is successful in blocking this merger, it would be hurting customers and helping strengthen larger, multi-channel retailers such as Amazon, Walmart and Costco – the very companies the FTC claims to be reining in – by allowing them to continue increasing their growing dominance of the grocery industry. In contrast, Albertsons Cos.’ merger with Kroger will ensure our neighborhood supermarkets can better compete with these mega retailers, all while benefitting our customers, associates, and communities. We are disappointed that the FTC continues to use the same outdated view of the U.S. grocery industry it used 20 years ago, and we look forward to presenting our arguments in Court.