What other papers say: Merger lawsuit could raise prices

The Federal Trade Commission’s lawsuit to block the Kroger-Albertsons merger recently went to trial, and the stakes for consumers are high. Chairwoman Lina Khan is once again bending antitrust law, and — wait for it — Kamala Harris is cheering on the government’s attempt to raise food prices.

Competition in the grocery industry has intensified with the expansion of dollar stores, limited-assortment discounters, warehouse centers and online retailers. Supermarkets like Kroger and Albertsons have lost ground to lower-price retailers. Their $24.6 billion merger aims to make them more competitive.

Kroger says the merger will save customers $1 billion and employees $1 billion in higher wages and benefits. Customer savings could be greater if competitors respond by lowering prices. But Ms. Khan believes the only good merger is a dead merger, and she is using the case to test new antitrust theories.

Let’s start with how the FTC narrowly defines the market as traditional supermarkets. This excludes Walmart, Costco, Amazon, Trader Joe’s, Aldi, and countless other food retailers with different business models. The FTC says that supermarkets offer “one-stop shopping.”

That’s true, but most people also look for variety and lower prices. Online shopping makes that easier. Consumers who shop at supermarkets typically visit at least four other types of grocery stores, such as club stores and supercenters. If Kroger raises prices, people have many alternatives.

The FTC’s claim that the merger would lead to excessive market concentration is also undermined by Kroger’s agreement to divest 579 of its roughly 5,000 stores, giving the agency a new argument that the merger would eliminate “face to face” competition. But that would mean that competitors could never merge. No court has ever ruled that.

The FTC also advances an unprecedented theory that the merger violates antitrust law because it would reduce competition. “grocery store workers union.” The Clayton Act prohibits monopolization of goods and commodities—not workers. The Supreme Court said the government cannot use antitrust law to regulate labor relations.

The FTC says the merger would make it harder for unions to play Kroger and Albertsons off against each other in collective bargaining because workers couldn’t use the threat of a strike at one store to encourage customers to shop at a unionized competitor, and would lead to less generous labor contracts.

Perhaps Ms. Khan doesn’t appreciate the irony of the agency’s argument. Collective bargaining and restrictive union rules have made supermarkets less competitive. Supermarkets are merging to cut costs while increasing supply chain efficiency. The alternative is to close down, as many have done.

Progressives blame supermarket consolidation for higher prices. But grocery prices rose just 13.4% in the decade before the pandemic, compared with 19% for overall prices and 17.5% for wholesale food prices. Competition and consolidation helped keep prices low until the Biden-era inflation.

Still, Ms. Harris praised the FTC lawsuit, even though a win for the agency would result in higher prices and potential job losses if stores close because they can’t compete. Ms. Khan doesn’t care. Her goal is to create legal uncertainty that will discourage companies from even trying to merge.

Kroger challenges the constitutionality of the FTC’s administrative process. The lawsuit argues that the dual removal protections for administrative judges violate the Constitution’s mandate that the president “he will take care that the Laws are faithfully observed.”

Kroger’s countersuit won’t affect the federal lawsuit, but it could limit the FTC’s authority. The more Ms. Khan stretches the law, the more she undermines her agency’s authority.

—Wall Street Journal

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