More on the FTC investigating Albertsons and Kroger as to whether they are truly competitors. The issue being how much of the market-controlled now by each and what would result after Kroger acquires Albertsons. Both the FTC and Unions argue “FTC argues different stores have different use cases. FTC lead attorney Susan Musser noted “you can’t just get a single avocado at a Costco, while the union pointed out that many stores, unlike Kroger and Albertsons, don’t sell proteins like meat and chicken, and that customers in poor areas may be limited to a store like Dollar General that “only sells Slim Jims” for meat.” ~~~~~~~ ‘Eat our dust Kroger:’ FTC and the grocery giants debate who real competitors are, Boise Dev PORTLAND, OR — In a warm
Topics:
Angry Bear considers the following as important: Kroger and Albertsons, law, US EConomics
This could be interesting, too:
NewDealdemocrat writes Real GDP for Q3 nicely positive, but long leading components mediocre to negative for the second quarter in a row
Joel Eissenberg writes Healthcare and the 2024 presidential election
NewDealdemocrat writes JOLTS report for September shows continued deceleration in almost all metrics, now close to a cause for concern
Angry Bear writes Title 8 Apprehensions, Office of Field Operations (OFO) Title 8 Inadmissible, and Title 42 Expulsions
More on the FTC investigating Albertsons and Kroger as to whether they are truly competitors. The issue being how much of the market-controlled now by each and what would result after Kroger acquires Albertsons.
Both the FTC and Unions argue “FTC argues different stores have different use cases. FTC lead attorney Susan Musser noted “you can’t just get a single avocado at a Costco, while the union pointed out that many stores, unlike Kroger and Albertsons, don’t sell proteins like meat and chicken, and that customers in poor areas may be limited to a store like Dollar General that “only sells Slim Jims” for meat.”
~~~~~~~
‘Eat our dust Kroger:’ FTC and the grocery giants debate who real competitors are, Boise Dev
PORTLAND, OR — In a warm Portland courtroom filled with more than two dozen attorneys, a number of reporters, and others, the top executives for Albertsons and Kroger did their best to convince a judge not to put their two-year-long quest to combine on ice.
The testimony was a key part of a three-week trial in the Federal Trade Commission’s bid to convince a judge to issue a preliminary injunction to put a hold on Kroger’s $25 billion bid to acquire Albertsons.
Wednesday’s court proceedings brought up key issues in the trial, such as whether or not Kroger and Albertsons are key competitors and what the future for Albertsons would look like should the deal fall through or be blocked.
What is a competitor?
During questioning from his company’s lawyer, Kroger CEO Rodney McMullen, a man whose nearly 50-year career with Kroger began with putting price stickers on items. He answered a long series of questions designed to help make the case that Kroger competes against dozens of retailer sand not just a smaller group that the Federal Trade Commission prefers to use. Saying . . .
“We would consider Walmart our number one grocery competitor. He noted they compete with Walmart in 99% to 100% of the markets in which they have stores, and said they price check Walmart weekly, “sometimes daily.”
It’s not just Walmart. Kroger attorney Matt Wolf, with a Fred Meyer water bottle nearby, led McMullen and Albertsons CEO Vivek Sankaran through a methodical set of other companies that sell groceries. Costco. Amazon. Dollar stores. Organic grocers. Upstarts like Aldi & Lidl. And more.
In each case, McMullen and Sankaran said Kroger competes with them for customers. While some of the companies might not be a big factor just yet, he sees them growing and says he doesn’t take them for granted. McMullen adds . . .
“In business, once something is obvious, it’s too late. We should have been worried about Walmart 10 years before we (were).”
McMullen said Kroger likes to take what he called a “no compromises” approach to its customers. He wants them to be able to get organic products, like they might find at Whole Foods, large packs, like those offered at Costco, and e-commerce options in line with Amazon’s grocery. He said they compete with all of the above on price.
Through it all, the CEOs spoke very little of competing with each other.
One-Stop-Shop
But when attorneys with the FTC got their chance, the questions shifted, with FTC attorneys asking questions designed to show Albertsons and Kroger consider each other primary competitors.
FTC lead counsel Susan Musser, with a Costco bottle perched on the lectern, pointed out Kroger referred to itself as a “one-stop-shop” for customers, in its annual reports from 2015-2023. After the FTC case was filed in 2024, the company dropped the wording from its report. McMullen conceded that some customers do prefer the one-stop-shop concept, where they can get groceries, meat, seafood, pharmacy items, and more.
The FTC contends Kroger and Albertsons are in that one-stop-shop category, while others like dollar stores and Whole Foods, are not. Musser’s questions probed the idea that Kroger and Albertsons’ positions are neighborhood grocers, putting them in direct competition with each other.
The FTC displayed a 2021 email Sankaran wrote to CNBC Mad Money host Jim Cramer, where he tried to sell the TV host on the idea that Albertsons, too, was a leader in one-stop shopping.
He said that he was “very proud of (Albertsons’) sustained, robust performance as it grows its position as a one-stop shop for customers.”
Under questioning, Sankaran said that he only meant for the core period where COVID-19 was impacting the US. He claimed market dynamics temporarily shifted where customers were shopping just a few stores, but said the pattern has shifted back.
Kroger and Albertsons overlap in 22 states. In individual markets where Kroger owns at least nine stores, and the two companies overlap, Albertsons is the first or second biggest competitor in all but three of those areas, according to a Kroger Fact Book document.
According to Sankaran, Albertsons’ competitors are “anybody who takes money from our customers” when it comes to grocery.
Kroger focus not what it appears, Sankaran claims
Emails from Sankaran to Albertsons leadership talking about how the company “crushed” Kroger in different sales categories were also displayed in the courtroom during questioning.
Susan Morris, the company’s COO responded to one of the emails with “eat our dust Kroger.”
Sankaran said the numerous references in internal documents to competing with Kroger weren’t because they were Albertsons’ main competitor, despite appearances, but he claimed it was for another reason entirely.
He said he used the example because he was trying to motivate Albertsons employees. He said he chose Kroger as an example because Kroger was the closest in sales performance, and he wanted to have a reachable goal to hit.
Albertsons without Kroger
As previously reported by BoiseDev, Albertsons representatives have argued in court that if the acquisition does not go through, the company will suffer. On Wednesday, Sankaran said that Albertsons was a “financially sound company” and that since he took over in 2019 Albertsons had made important adjustments in the supply chain giving them a sharper competitive edge. However, he also said that while the company always works to be more efficient, there’s a limit to how far they can go.
Sankaran suggested that if the acquisition doesn’t go through, the company could go through layoffs, close stores, and exit markets. When asked by FTC lawyers if Albertsons had concrete plans to do any of these measures, Sankaran skirted the question.
The FTC pointed out that Albertson’s Sankaran told Congress in late 2022 that it had “ample” resources. He also told Congress they planned to keep investing in stores and associates, even if the merger deal didn’t go through. The FTC suggested this cut against Albertsons’ argument now that it will be in trouble if the deal doesn’t go through.
He said two years have passed, and the landscape has shifted.