FTC’s Kroger-Albertsons Merger Lawsuit Is a Political Tie-Dye

The proposed Kroger-Albertsons merger has captured the attention of the Federal Trade Commission and the public, and in an election year marked by inflation, the deal has political overtones.

Grocery giant Kroger’s plan to acquire rival Albertsons in the largest supermarket merger in history was announced in October 2022. The $24.6 billion acquisition has since faced obstacles, the biggest of which was an FTC lawsuit to halt the deal announced in February.

The deal is set against the backdrop of several years of historic food price inflation that has eroded voters’ purchasing power and pushed the issue, and the broader economy, to the forefront of voters’ minds in this year’s election. Kroger argues that the acquisition would allow the stores to compete with big-box retailers like Costco, Walmart and Amazon, the country’s three largest grocers, and actually lower prices. The FTC, meanwhile, says the acquisition is actually anticompetitive because Kroger and Albertsons are direct competitors to the supermarkets.

The politics around the merger are a bit of a mixed bag for Republicans, as the party under former President Donald Trump has increasingly leaned into populism and away from the typical Republican stance of supporting big business and getting government out of corporate operations.

For example, Trump’s vice presidential nominee, Sen. J.D. Vance (R-OH), has been highly critical of President Joe Biden’s administration but has praised the FTC, the agency that is tasked with finalizing the planned Kroger-Albertsons merger.

The vice presidential candidate has previously said that FTC Commissioner Lina Khan is “one of the few people in the Biden administration who I think is doing a pretty good job.” Last month, during a campaign trip with Vance, Washington Examiner asked him for further explanation of this matter.

Vance said there were things she did that he liked and things he didn’t like.

“I think he has legitimate concerns about some of the big tech companies and the concentration of power,” Vance said, adding that he believes he has sometimes been too aggressive with smaller companies, making it harder to raise capital.

“So, look, she’s not perfect, but what I really like about Lina is that she doesn’t focus on the ridiculous wokeness stuff,” Vance said. “She realizes that her job, whether you agree with it or not, is to work at the FTC, not to be some ridiculous diversity enforcer. I appreciate that.”

But the merger is an unusually political issue, perhaps more so than other proposed mergers in other industries, because food prices are often in the news.

While inflation has hit nearly every part of the economy, consumers are feeling the brunt of years of compounding inflation at the grocery store. Since January 2021, when Biden was inaugurated, grocery prices have risen an average of 21%, according to the Consumer Price Index.

Republicans like Trump and Vance blame Biden and, by extension, Vice President Kamala Harris for inflation. They blame a rash of federal spending since the president took office, primarily the $1.9 trillion American Rescue Plan that sent stimulus checks to many voters.

But Harris and Biden sought to paint a different picture of rising prices — one in which greedy corporations, of which the vice president included Krogers, have seized the opportunity to raise prices and make a quick profit by inflating prices.

Harris, capitalizing on political discontent over food prices, introduced the price gouging plan as her campaign’s first economic policy proposal. The campaign announced that she would try to enact “the first-ever federal ban on corporate price gouging,” though the details are unclear — including whether the plan would be possible without congressional support. In the same speech, she went so far as to call the Kroger-Albertsons merger an example of corporations causing higher food prices.

Several Democratic lawmakers said Political that her price controls proposal has no chance of passing anytime soon, even if Democrats take control of Congress.

Republicans say her plan is really a form of price control that is designed to create shortages by increasing demand as customers want to buy goods at government-imposed discounts. At the same time, suppliers are less willing to stock up on goods because they are no longer asking for higher prices. Harris’ opponents say the result will be shortages at grocery stores across the country.

Rep. Mike Rulli (R-OH), a grocery store owner, said Washington Examiner that Harris’ plan is “reckless” and emphasized that grocery stores, unlike other businesses, operate on razor-thin profit margins. He said many Ohio grocery stores have already gone bankrupt because it’s hard to operate on such thin profit margins, which contradicts the idea of ​​greedy companies raising prices.

Peter Loge, director of George Washington University’s School of Media and Public Affairs, said there’s another factor at play in the merger’s connection to politics: Many of the stores that are likely to become part of the new megacorporation are in key swing states for Harris and Trump.

“I know one of the things candidates look at is how much gas and groceries cost in Harrisburg, Pennsylvania, or the suburbs of Atlanta, or Savannah, or how much it costs in Mesa, Arizona,” Loge said. Washington Examiner.

Loge said an effective Harris strategy could be to go to those parts of the country and connect with voters there. He added that Harris should emphasize her middle-class background while saying she would support the merger if it lowered the price of milk and bread and oppose it if it didn’t.

“If I were the Democratic candidate in one of those places, I could argue that the Republican solution is to give rich people more money and big companies get bigger,” Loge said. “But the Democratic solution is, ‘Let’s make sure that groceries are affordable and big companies get bigger, which means higher prices for everyone because there’s less competition.’”

Alex Reinauer is a research fellow at the Competitive Enterprise Institute, where he specializes in antitrust. He said one reason the FTC might be interested in the merger is that it’s an election year, which underscores how closely tied it is to the current political landscape.

Reinauer noted that Harris’ campaign is straddling a political boundary with the FTC more broadly. LinkedIn CEO Reid Hoffman, a major Democratic donor, has pushed for Harris to replace Khan as FTC chief if elected in November.

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“I hope Vice President Harris replaces her,” Hoffman told CNN. “Antitrust is fine. … Waging war is not.”

Reinauer said Washington Examiner that in the context of the FTC, Harris may be trying to find a balance between her focus on grocery prices and her proposal to combat allegations of food overpricing, which is meeting resistance from internal donors like Hoffman to Khan’s FTC.