Kroger and Albertsons announced a $25 billion deal that would combine the two brands into one – but the deal isn't closed yet, as federal regulators see it as a potential blow to consumers.
Kroger's plan was to buy out Albertsons for $20 billion and assume the company's $5 billion in debt. The two companies claim that this deal would ultimately save them hundreds of millions of dollars and that shoppers would reap the benefits of the low prices and increased product choices. However, this merger might go against federal anti-trust rules, as consumers could be subject to price gouging.
Democrats and Republicans are united on the issue, as both are concerned for Americans who are already struggling to pay for groceries at their current prices. Republican Senator Mike Lee of Utah, a member of the Senate's anti-trust panel, told his constituents that skyrocketing food prices would only worsen if these two companies were allowed to merge.
"I will do everything in my power to ensure our anti-trust laws are robustly enforced to protect consumers from anticompetitive mergers that could further exacerbate the financial strain we already feel in the grocery store checkout aisle," Sen. Lee said in a statement.
One supermarket giant dominating the industry could be a problem for more than just consumers. It could also put more small grocery stores out of business.
The deal is set to be reviewed by the Federal Trade Commission (FTC), which will ultimately decide whether or not the merger is possible if both Albertsons and Kroger agree to downsize. However, it remains unclear whether the FTC (or another governmental agency) will move to stop the deal from being completed.
As it stands, a regulating organization can sue to block this merger, which could cause both Kroger and Albertsons to fold under the prospect of a lengthy legal battle with high fees. If regulators approve the deal, it is expected to close in 2024.