Mega-Merger Meltdown: FTC Blocks Kroger-Albertsons Deal, John Mayo Featured in The Economist

Posted in News  |  Tagged News - Digital Economy

The largest supermarket merger in U.S. history is off. On December 10th, federal and state judges backed the Federal Trade Commission (FTC) in blocking Kroger’s $24.6 billion bid to acquire Albertsons. The deal would have created a $200 billion grocery giant with 5,000 stores, 4,000 pharmacies, and 700,000 employees nationwide.

The FTC, supported by eight state attorneys-general, argued the merger would stifle competition, raising prices and undermining unionized workers. Central to their case was a narrow market definition: supermarkets that offer full weekly grocery shopping. This definition excludes major competitors like Walmart, Costco, Whole Foods, Instacart, and specialty retailers such as Trader Joe’s and Aldi. It also fails to consider changing consumer habits, including online shopping and multi-channel purchasing.

John Mayo of Georgetown’s Center for Business and Public Policy suggests the FTC’s case relied on a “relatively contrived market definition.” He argues the FTC’s market definition inflates Kroger and Albertsons’ market power by disregarding the broader retail landscape where grocery dollars are fiercely contested. Discount stores, online platforms, and warehouse clubs all play a significant role in shaping competition, making the FTC’s assessment myopic.

By December 11th, Albertsons not only canceled the merger but also sued Kroger, accusing it of failing to make “best efforts” to secure regulatory approval. This high-profile collapse underscores the complexities of regulating competition in a rapidly evolving marketplace.