Don’t block the Kroger-Albertsons merger

The following column by Arizona Chamber of Commerce & Industry President and CEO Danny Seiden originally appeared on azcentral.

In the latest edition of “Rich States, Poor States,” an annual report assessing state economic performance across several categories, Arizona ranks third nationally for economic performance.

The lofty ranking can in part be attributed to Arizona policymakers’ commitment to marketplace competition and a lighter regulatory burden on job creators.

That commitment has resulted not only in more jobs but has also benefited Arizonans with more choices and lower prices.

Perhaps no sector of our economy is as competitive as the grocery industry.

No longer limited to traditional grocery stores, concepts like supercenters, membership clubs and online grocers have entered the field to compete for a spot in consumers’ household budgets.

The competition is fierce. Grocers need to be innovative to survive. Some, like Kroger and Albertsons, which own Fry’s and Safeway, respectively, want to team up.

A Kroger-Albertsons merger makes sense.

Consider that Walmart is the largest grocer in the world and in the United States, where the company’s 30% national share is more than double a combined Kroger and Albertsons.

The same goes for Arizona, where, just like nationally, Walmart has a bigger market share than even a combined Kroger and Albertsons would.

Amazon, Costco, Target, and Aldi have all grown their offerings in Arizona as well.

So, with all this competition that gives Arizona shoppers wide selections at various price points, why is Arizona Attorney General Kris Mayes suing to stop a combined Kroger and Albertsons by relying on a law intended to stop monopolies?

Mayes, the FTC and other state attorneys general allege in their complaint seeking to block the merger that a combined Kroger and Albertsons will eliminate competition and raise grocery prices. They say they’re looking out for consumers and workers, but they’re doing more harm than good.

After all, if Kroger and Albertsons can’t keep pace in their current form, then stores will close, leaving shoppers with fewer choices and workers out of a job – both here in Arizona and across the country.

But under a merger, Kroger and Albertsons have committed to not closing stores.

To meet competition requirements, they are selling several stores to C&S, which already operates a national network supplying more than 7,500 independent grocery stores. It also owns the Piggly Wiggly and Grand Union grocery brands.

Various stores in Arizona are part of the sale, meaning more choices for consumers and saved jobs, including union jobs. C&S said it will continue to recognize the union workforce and maintain all collective bargaining agreements.

Claims of price hikes don’t add up, either.

Kroger has lowered prices following other acquisitions. Over the last 20 years, Kroger has reduced its gross profit margin significantly to lower prices for customers by $5 billion, as CEO Rodney McMullen testified to Congress in November 2022.

As part of the merger with Albertsons, Kroger has committed an additional $500 million to continue lowering prices after the transaction is completed.

Mayes and opponents say they’re responding to consumers’ concerns and concerns. But their rhetoric around the proposed merger contradicts the public commitments Kroger has made since the merger was announced.

And that only contributes to the consumer anxiety opponents cite as justification for seeking to block the deal.

Kroger and Albertsons have made strong commitments to preserve jobs and shopper choice. We would expect the attorney general and opponents to hold them accountable for keeping their end of the bargain.

Two grocery companies have assessed the market conditions and have concluded that a merger makes the most sense for their continued survival.

Let the market determine whether they’ve made the right calculation.

Danny Seiden is president and CEO of the Arizona Chamber of Commerce & Industry

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