Updated: Sep 15
When it comes to the proposed merger of Idaho-based Albertsons and the supermarket giant Kroger, there's no need for a cleanup on aisle three - the free market is at work.
The Federal Trade Commission is reviewing the sale to make sure it complies with antitrust laws. This is exactly what they should be doing.
But newspapers and some politicians have raised alarm bells about the partnership. The Washington State Treasurer recently wrote "the consolidation of Kroger and Albertsons may lead to the creation of food deserts, which disproportionately affect vulnerable populations and can have severe health implications."
One newspaper said "after more than two years of high inflation, much of it landing on consumers at the grocery store, protection from reduced competition — and its higher prices and reduced accessibility to daily goods and services — must be assured."
A valid concern - but is it well placed?
Ten of the top 15 American grocers are not physical supermarkets.
Amazon, Wal-Mart and Costco are the biggest three names in grocery. Even if Kroger and Albertsons merged, they wouldn't come close to approaching half of Costco's value.
If you take Amazon out of the equation, Walmart and Costco combined account for nearly 30% of the grocery market.
It's hard, however, to remove Amazon, as only 44% of Americans buy most of their groceries at physical stores. Before COVID, that number was 63%. More Americans have moved their shopping online.
Competition is everything. History has shown that strong competitors only increase the benefits for consumers.
An economist with the Strategic Resource Group recently told Yahoo Finance "Kroger’s acquisition of Albertsons is the last, best, and final chance to level the playing field."
Albertsons and Kroger have even announced plans to sell off stores to another company to ensure there are fewer concerns about competition. The recent announcement ensures no stores will close as a result.
As with any proposal, there is fear of the unknown. But we shouldn't let fear destroy an opportunity to actually increase competition and improve the outlook for the consumer.