How the contested Kroger-Albertsons merger deal could affect North Texas stores
DALLAS - A federal agency is looking to block a major merger between two grocery store giants.
Kroger and Albertsons want to merge in a deal that could affect hundreds of stores in Texas.
The challenge by the Federal Trade Commission puts the $25 billion deal in question.
If it does go through, it will impact more than two dozen stores in Texas, some of which could be in the DFW area.
Monday, the FTC filed a lawsuit challenging the $25 billion merger between Kroger and Albertsons.
Douglas Farrar with the FTC told FOX 4 that they are looking out for you, the consumer.
"Americans are paying very high costs for groceries, milk, bread, eggs, that sort of thing," he said.
Farrar claims the deal would negatively impact customers.
"And if this merger goes through, the FTC believes that prices for those groceries will go up," he said.
SMU Economist Mike Davis says this challenge may never actually go to court, meaning there could be more concessions in a final deal.
As it stands now, Kroger agreed to sell off 400 stores; 26 of them are in Texas.
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Kroger and Albertsons will sell more than 400 stores and other assets for about $1.9 billion, seeking to clear a path for a merger with antitrust regulators reviewing a deal that would unify two of the nation's largest grocery chains.
While Albertsons has a footprint in North Texas, there are more Tom Thumb stores, which fall under the Albertsons banner.
"Kroger is going to say if we put these two stores together, it could bring some cost savings," Davis said. "Kroger is going to say that, but it could be true."
The supermarket chains have said the deal will help them compete against Walmart, Costco and Amazon.
Kroger is criticizing the FTC lawsuit, saying in a statement, "This decision only strengthens larger, non-unionized retailers like Walmart, Costco and Amazon by allowing them to further increase their overwhelming and growing dominance of the grocery industry."
The FTC had a response to concerns about Walmart.
"With respect to competing with Walmart: if you ask Kroger and Albertsons executives who they believe they're competing against, it's with one another," Farrar "And we laid that out clearly in the complaint. These companies fixate on what the other one is doing on terms of price, in terms of services, in terms of freshness of produce, quality of prepackaged goods. So they are competing with one another. And that's in their own words."
Kroger and Albertsons first announced merger plans in October 2022.
Davis says the FTC is known for running out the clock in these situations, meaning taking up time.
"Once two entities start merger talks, they want to end the merger talks," he said. "They can’t let it stretch out for a year or two years or something like that."
The highest concentration for the merger is in Washington and Oregon. If a deal goes through, Kroger could be the only grocery store in certain locations.