Kroger announced Tuesday that the Federal Trade Commission has requested more details about the grocer’s proposed $24.6 billion merger with Albertsons — an indication that the agency is taking a closer look at how the deal would impact competition.
The FTC’s request — known as a “second request” — extends the waiting period for the parties of a proposed merger by 30 days after they have complied substantially with the request for more information or until the agency ends the waiting period early.
After the waiting period is up, the FTC will decide to either close its investigation, enter into a settlement with the companies or pursue legal action in federal district court or through the FTC’s administrative process to attempt to block the deal.
While Kroger did not say what kind of additional information the FTC requested, the move by the agency is not surprising given that the deal is expected to receive intense antitrust scrutiny by regulators.
“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,” the grocer said in the announcement.
Albertsons also received a second request for information from the FTC, according to an emailed response to Barron’s on Tuesday. While the grocer has yet to release its own statement on the matter, like Kroger, the type of additional information being sought after is not specified.
Kroger has maintained its stance that the merger will lower prices for consumers, improve access to fresh food, secure union jobs and help build a more equitable food system without hurting grocery competition. Opponents of the proposed deal, including labor groups, argue it will do the opposite by decreasing competition in the industry, raising food prices and causing major job cuts.
Kroger executives on the grocer’s earnings call last week projected confidence about the proposed merger with Albertsons while remaining tight-lipped about the deal, which is already facing political pushback and will likely receive antitrust scrutiny from regulators.
“We are making early progress on our integration planning as expected, and we continue to engage with all of our stakeholders and regulators,” Kroger CEO and Chairman Rodney McMullen told investors.
At a Senate hearing at the end of November, McMullen said that both grocers have proposed forming a spinoff to buy stores they need to sell to win regulatory approval for the merger and that the retailers will focus on finding buyers.
“We will work with the FTC in terms of divesting stores to a viable competitor. And if that’s not successful, using the SpinCo structure as well,” McMullen said about the spinoff plan.
