Kroger’s proposed $26.4 billion takeover of Albertsons is being criticized as potentially reducing competition in grocery sales. Although the Federal Trade Commission is studying the possible consequences of the proposed merger, numerous lawsuits have been filed on behalf of consumers to block it.
They include one in California by San Francisco attorney Joseph Alioto which claims the merger “may substantially lessen competition and tend to create a monopoly” in several areas of the U.S.
But Scott Moses, an investment banker advising Albertsons in the pending transaction, agues such critics do not understand the current state of the grocery industry. Although Kroger — which owns Fred Meyer in Oregon and Washington — and Albertsons are the largest supermarket chains in the country, supermarkets only account for a small and shrinking percent of all grocery sales.
In fact, supermarkets like Kroger and Albertsons pale in comparison to the size of the national discount grocers that have grown to dominate the industry over the past 20 years, including Walmart, Amazon, Costco and Dollar General. Today, supermarkets account for just 37% of all grocery sales compared to 63% for national discount grocers, Moses said.