From the Wall Street Journal this morning:
"Kroger Co. and Albertsons Cos. said their $20 billion deal to create a new supermarket giant will help them compete with larger rivals in an evolving grocery industry dominated by Walmart Inc. and targeted by Amazon.com Inc.
"The antitrust authorities who review the planned merger, however, may be more focused on the supermarket down the street, according to lawyers and industry officials.
"Kroger’s plan to acquire rival Albertsons, announced last week, would combine the biggest and second-biggest supermarket companies in the country by sales, which operate a combined total of about 5,000 stores stretching from California to Washington, D.C.
"The companies’ combined market share of 13% of U.S. grocery sales would rank below Walmart’s 22%, and their combined annual sales of more than $200 billion would remain below the nearly $500 billion generated by Amazon, which has been pushing into the U.S. grocery market via its 2017 deal for Whole Foods Market and other services."
- KC's View:
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Wait. Antitrust regulators are going to focus primarily on competitive impact of a Kroger-Albertsons deal?
Isn't that the whole point?
I agree with the idea that the Federal Trade Commission (FTC) needs to closely examine the impact of the deal on smaller competitors, but I don't think it is fair to suggest that a Kroger-Albertsons combo will be so much smaller than Amazon.
Sure, Amazon may have almost $500 billion in annual sales, but only a fraction of that is in grocery, and most food retailers will tell you that Amazon has not yet proven that it knows how to be an effective omnichannel food retailer. Of course, the smartest food retailers also will say that Amazon is just one big hire - of an accomplished and visionary food retail executive - away from figuring it out.
But you have to compare apples with apples, not with pork chops.
