Alaska politicians oppose KrogerAlbertsons merger
By Megan Gannon
Last week, nearly half of the Alaska Legislature joined the chorus of opposition to the Kroger-Albertsons grocery store merger. A bipartisan group of 24 lawmakers signed a letter urging the chair of the Federal Trade Commission to block the $25 billion deal.
“The merger creates an opportunity for monopolistic practices and an environment that lacks competition, as these companies are Alaska’s two major grocery store chains,” the letter addressed to FTC Chair Lina Khan said. “Alaska already has some of the highest grocery prices in the nation, especially in our more secluded and rural areas, connected only by air or water. We cannot, in good conscience, support unnecessary cost increases that place barriers on Alaskans’ ability to put food on the table.”
In October 2022, Kroger, which is the parent company of Fred Meyer, agreed to take over Albertsons, which is the parent company of Carrs-Safeway. Last month, the companies announced their intention to sell more than 400 stores as part of the agreement, including 14 of 35 existing Carrs-Safeway stores in Alaska.
A Kroger spokesperson would not comment on whether Hanson’s in Nome, a Carrs-Safeway store, was on that list. It remains unclear which exact locations would be affected.
“Because we are still in the regulatory process, we are not in a position at this time to share the specific locations that will be divested to continue serving the community under a different owner,” a Kroger spokesperson told the Nugget in an email. “We anticipate being able to share these details closer to closing.”
The letter signed by members of Alaska’s State Legislature condemned the uncertainty created by this announcement about which stores would potentially be sold.
“This leaves many communities worried, and rightly so, that a reliable and affordable food source may not be as readily available anymore,” the letter said. “It could mean families in an already weakened economy may have to find income in another community or state.”
In their announcement last month, Kroger and Albertsons said they found a buyer for the stores they plan to sell: C&S Wholesale Grocers, which is headquartered in New Hampshire and does not currently operate in Alaska. The company owns Grand Union and Piggly Wiggly and supplies independent supermarkets, military bases and retail chain stores.
The lawmakers noted in their onnected only by air or water. We cannot, in good conscience, support unnecessary cost increases that place barriers on Alaskans’ ability to put food on the tableletter that similar sales prompted by mergers in the past have not delivered on their promises of continued employment and competition. For example, when Safeway bought Alaska-based Carrs grocery stores in 1999, they were required to sell seven Carrs stores to a competitor as part of the $330 million deal. According to the Alaska Beacon, six of those stores, which were bought by Alaska Marketplace, closed within a year.
FTC Chair Khan, too, has signaled that she is wary of repeating past outcomes. In a recent public appearance in Las Vegas, she referenced the 2015 merger of Safeway and Albertsons. Under that FTC-approved deal, Albertsons sold off 146 stores to Haggen, which struggled to grow and quickly had to close stores and declare bankruptcy.
“If there’s a merger that is presenting a lot of risk of reducing competition, [and] may even create a monopoly, you know, we need to weigh those risks, and especially given that some of these remedies in the past have failed,” Khan told the local TV news outlet 8 News Now. The merger also has been opposed by the Alaska Delegation in Congress. In her letter to Khan, Rep. Mary Peltola said the merger would threaten “both competition and basic food security” in the state.
Meanwhile, Sen. Lisa Murkowski and Sen. Dan Sullivan speculated that the 14 stores to be sold under the deal would likely be locations in Alaska’s most populous markets where Fred Meyer and Carrs-Safeway stores currently exist near one another.
The senators wrote in a letter that this would mean that Kroger would lose “its largest and most sophisticated competitor, which in time would be subsumed by a new and unproven operator in the Alaskan market,” referring to C&S. They added that the proposal appears to violate the FTC’s merger guidelines regarding market competition and concentration.
Murkowski and Sullivan additionally noted that Fred Meyer and Carrs-Safeway are the third and fourth largest employers by number of employees in the state, and voiced concern for the merger’s labor implications. Labor unions have also come out in opposition to the deal.
“To date, no adequate evidence shows how this proposed merger will ultimately benefit Alaskan consumers,” the senators wrote. “Instead, recent history points to consumer and employee harm, so we ask that the FTC consider enforceable measures to prevent a similar circumstance in Alaska.”
It is unclear if and when the FTC might challenge the merger in court, but Kroger said the deal is on track to close by early 2024.
“We cannot, in good conscience, support unnecessary cost increases that place barriers on Alaskans’ ability to put food on the table.”
—FTC Chair Lina Khan