Merger of Albertsons and Kroger: Opportunities and Regulatory Hurdles

In October 2022, the two major supermarket chains Albertsons and Kroger began merger talks. Both companies aim to strengthen their market position to better compete against giants like Walmart, Target, Costco, and Amazon. In this partnership, Kroger appears to be the natural buyer due to its double revenue, with the transaction to be completed entirely in cash. However, a potential obstacle is the U.S. antitrust authority, the Federal Trade Commission (FTC), which has historically taken a skeptical stance on mergers of this magnitude. The merger of the two supermarket chains could endanger internal market competition, as Kroger and Albertsons compete directly in many geographical markets. In scenarios where branches of both companies are located in close proximity, the prices are kept in check. If a single company were to gain control over both brands, price increases could result. While the merger can strengthen the alliance against the giant Walmart, it could reduce competition among the retailers themselves. This dynamic will be the focus of the FTC review.