![]() “The evidence that we’ve seen from past mergers is the companies that buy these stores are not always in the best position to compete,” Kelloway said. “The concern is that those will be stores in communities of color, which just tend to be the stores that historically these grocery chains have closed first.”Ī divestiture doesn’t mean a store would close, but questions remain as to whether divested stores will be in a position to compete with the combined behemoth grocery company. “These companies will sell off, typically, the stores they don’t want, the stores they view as less profitable,” said Kelloway, the antitrust expert with Open Markets Institute. In Chicago, where grocery companies have faced criticism from residents and local elected officials for shuttering stores in disinvested neighborhoods on the South and West sides, the potential for divestitures has led to concern about store closures. Will they take a hyper-local approach, analyzing competition block by block? How will they define the competition? Will corner stores that sell food count? Regulators evaluate both the geographic overlap between the brands and the presence of nearby competition when deciding where to require divestitures, experts said. Kroger and Albertsons have said they are prepared to spin off between 100 and 375 stores into a stand-alone publicly-traded company in order for the deal to pass muster with regulators.īut questions remain about how regulators will approach their analysis. In 2013, well after Chicago ceased being a two-grocery town, Safeway shuttered the struggling Dominick’s chain for good, opening the door for the rise of Mariano’s. After a series of ownership changes, Dominick’s was purchased by Safeway in 1998 for more than $1 billion and the assumption of millions of dollars in debt. In 2013, SuperValu sold Jewel to Cerberus as part of a $3.3 billion acquisition that also included Albertsons.įor years, Jewel’s chief rival in the Chicago area was Dominick’s, founded in 1925 by Sicilian immigrant Dominick DiMatteo as a small corner market on the city’s West Side. Minnesota-based SuperValu acquired more than 1,100 Albertson’s-owned stores in the transaction, including Jewel. "They're going to face a great deal more skepticism about the potential benefits of the consolidation,"īut the federal competition regulators have also recently lost in litigation over some attempts to block mergers, said Kovacic, who's now a law professor at George Washington University.In 2006, an investor group led by Cerberus Capital Management acquired more than 650 Albertson’s stores as part of a broader deal that broke up the grocer. Kroger and Albertsons are "going to get a much closer look than earlier transactions received in this sector," said William Kovacic, former lawyer and chair at the Federal Trade Commission. retail.Īntitrust regulators in the Biden administration have advocated for changes in the government's approach to mergers, and they have pushed back against megadeals, citing outsize impact on competition and consumer prices. The two also face competitions from Costco as well as Amazon, with its online delivery reach, and lately, dollar stores, the fastest-growing segment of U.S. ![]() In the Friday announcement, Kroger said it would "reinvest approximately half a billion dollars of cost savings from synergies to reduce prices for customers" and invest $1 billion to raise wages and benefits for workers.įor both companies, Walmart is a key competitor, as a nationwide big-box giant that sells more groceries than Kroger and Albertsons combined. ![]() Their tie-up would involve spinning off up to 375 stores into a separate company, the companies said. The two overlap in several markets, largely in the western part of the country.
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