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Who is the government protecting by blocking Kroger-Albertsons?

The slogan of the Federal Trade Commission is “protecting America’s consumers.” But the decision by the FTC to block the merger of Albertsons and Kroger has done the exact opposite. The matter now heads to federal court – the first time a supermarket merger has been litigated since 1988.


It’s hard to really understand who the government is protecting with Monday’s announcement. One thing is for certain: grocery giants including Walmart, Costco and Amazon love this news. It means one less competitor. And that was the issue regulators and opponents seemed to miss.


Instead of reducing competition, the merger of Albertsons and Kroger would have actually created more competition.


Walmart/Sam’s Club makes up nearly a third – 30 percent – of the U.S. grocery market share. Costco tallies another 7 percent. Amazon is moving quickly and accounts for more than 5 percent. And consider this: Amazon Prime, Walmart+ and Costco have more than 250 million subscriptions.


Even if the Albertsons-Kroger merger proceeds, it would account for just 9 percent of nationwide sales, according to the International Center for Law and Economics. But what it would do is get the attention of the big three – increasing competition with their 42% of the current market share.


Furthermore, Walmart, Costco and Amazon do not have a unionized workforce – Albertsons and Kroger do and have earned the endorsement of the merger from union leaders. The government claims workers would be harmed, but union leaders likely know better.


Unfortunately, government regulators seem to be relying on an outdated model to determine what is best for consumers and grocery stores. Does a grocery store have to be a traditional brick and mortar location? Are online supermarkets be counted? If not, why? It is clear that Amazon, Walmart and Costco directly compete with Kroger and Albertsons, so why wouldn’t they be included in any merger analysis?


Nearly 30 years ago, supermarkets accounted for 81% of retail sales. That dropped to 61% a decade later, and today, it’s near 50%. Where have all of the customers gone? Online and warehouse stores.


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."


A review of all of the Albertsons and Kroger locations throughout the country shows very few places where the two stores both have locations, and in the places where there was overlap, Albertsons and Kroger agreed to divest.


The companies even announced a plan to invest $500 million to lower prices on day one of the merger, and invest an additional $1.3 billion to improve Albertsons stores. This would have been enormously beneficial to Idaho and the surrounding region.


By taking the extraordinary step to block this merger, the government does more harm than good. They'll have to defend the action in federal court.

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