The Federal Trade Commission (FTC) yesterday sent what is called "a second request" for additional information on the proposed $24.6 billion acquisition by Kroger of Albertsons, a deal that would, if approved, combine the second and fourth ranked US supermarket chains.
Bloomberg writes that "such a request lengthens a transaction’s antitrust review by months or years, depending on the complexity of the agreement."
In a statement, Kroger said: "Kroger looks forward to realizing the compelling benefits this merger will offer, including enhancing competition, lowering prices for customers, improving access to fresh food, creating opportunities to continue investing in our associates and securing the long-term future of union jobs. We will continue to work cooperatively with the Federal Trade Commission as it conducts its review of the merger, including developing a thoughtful divestiture plan. Kroger continues to expect to complete the merger in early 2024."
Bloomberg writes that "together, the companies operate a combined total of almost 5,000 stores, though they have agreed to divest as many as 375 to win regulatory approval and Kroger suggested in a federal filing that 650 was the upper limit.
"The merger has sparked opposition from lawmakers, labor unions and consumer groups over concerns that it will increase food prices already under pressure from inflation. At a Senate hearing in November, nearly a dozen lawmakers pressed the CEOs of Kroger and Albertsons on the deal.
- KC's View:
It became clearer today with a piece in the New York Times the evolving environment in which the Kroger-Albertsons deal is seeking approval.
The Biden administration's FTC, the story says, has "been bringing risky cases that use novel legal arguments to stop corporate mergers and nurture competition. Their goal is to stretch the uses of antitrust law beyond the ways it has been applied for decades, including against the biggest tech companies."
In a case that will be hard in court this week, the FTC will argue that Meta should not buy a virtual reality start-up called Within on the grounds that the "deal would hurt potential competition in a market for virtual reality products that could be robust in the future. In contrast, most antitrust cases have traditionally focused on how a deal would hinder competition in an area that is already mature."
The FTC is employing this strategy even though it knows it could lose. Part of the goal is to test the outer limits of current antitrust law, as well as to signal to lawmakers the degree to which existing legislation needs to be updated.
The Times notes that "under the Biden administration, the Justice Department has sued to block eight mergers and an alliance between American Airlines and JetBlue without announcing a settlement, while the F.T.C. has filed eight lawsuits challenging corporate mergers, including Meta’s virtual reality deal. A couple of those already have failed in court, but are under appeal.
The larger point, I think, is that Kroger and Albertsons could face tougher headwinds than expected, with the companies forced to answer questions that might never have been asked in years past.