The Next President Could Be Decided in the Grocery Line (2024)

For many Americans, their wallets will help inform their vote this November. Specifically, how much they’re spending on groceries.

A pending $25 billion merger between Kroger and Albertsons—two of the country’s largest grocery chains—would also drastically affect how Americans get their groceries. Combined, the company would be the second-largest grocery chain in the country, trailing only Walmart.
In October 2022, when the two companies announced their intent to merge, it immediately raised a red flag for members of Congress, the Federal Trade Commission, consumer rights organizations, and labor activists.

Their respective CEOs eventually testified in front of the Senate Judiciary Committee. The FTC stepped in, and a bipartisan group of attorneys general filed a lawsuit to block the merger. Opponents argue that the merger could hinder grocery buyers’ choices, eliminate competition, and lead to lower-quality products for consumers.

Shoppers like Victoria Anderson are all too familiar with the lack of competition.

In rural Vermont, Anderson goes to Shaw’s, owned by Albertsons. There’s essentially no competition around her, so there’s little incentive for the market to lower prices to something she and her family feel is reasonable.

“It’s like grocery prices skyrocketed one day, and then it feels like they just really have not leveled out. Initially they were saying, Oh, it’s a shortage of goods and we can’t get anything over here because of the shipping and COVID. And it’s like, OK, well it’s 2024,” Anderson told Slate.

That’s despite economic measures that otherwise suggest that prices should be down in the grocery aisle. Over the past two years, inflation has cooled 5.8 percent. The costs of goods like eggs and milk have also dropped.

The Biden administration has continually touted the slowing of inflation as an economic success heading into the general election. But many consumers, including Anderson, are not feeling the benefits of the stronger economy the White House keeps invoking—a trend that emboldens conservative messaging rather than points the finger at corporate markups, which accounted for half of inflation in 2021.

“When you have such a big place in the market, you also have the opportunity to hide behind shocks like inflation or like a pandemic,” said Rakeen Mabud, chief economist for the public policy think tank Groundwork Collaborative. “That’s when you see profiteering behavior go up and up and up. This is especially the case for companies in sectors where they have a captive market,” such as megagrocers.

In 2023 corporate profits hit their widest margins since the 1950s, and yet prices continued to rise for consumers at the grocery store.

“Businesses are profit maximizers. If companies could have raised prices before then, they would have,” said William Dickens, professor of economics and public policy at Northeastern University.

This February, a group of Democratic senators led by Massachusetts Sen. Elizabeth Warren introduced the Price Gouging Prevention Act. In addition to outlawing price gouging, the legislation would call on the FTC to target companies that allegedly exploited the economic impacts of the COVID-19 pandemic to increase profits. The bill would also provide $1 billion to the federal agency.

If the bill passes, its enforcement will depend on who’s sitting in the Oval Office.

Trump has previously weaponized the FTC. He tried to block the AT&T and Time Warner merger, a move critics believe he made because he didn’t like the way CNN, then a subsidiary of Time Warner, was covering his presidency.

Even in instances not involving a personal feud, Trump has been tough on several other big mergers and acquisitions. The Trump administration blocked a merger between Sinclair Broadcasting and Tribune Media, as well as between Broadcom and Qualcomm; and forced companies like DaVita, Bristol-Myers Squibb, and CVS to make significant concessions to push a merger through.

At the same time, Trump has vowed to be a little more lax with those he considers friendly to his interests, like the oil and gas sector. In the case of Kroger and Albertsons, the CEO of the private-equity firm that is Albertsons’ largest shareholder is Steve Feinberg, who also happens to be one of Trump’s closest allies.

The Trump campaign did not respond to a request for comment.

Under Biden, the FTC has been pretty hawkish on mergers. The Biden White House blocked mergers in the airline industry and within hospital systems. In the process, the administration updated antitrust guidelines that would allow the agency to keep a closer eye on ultra-consolidated industries like grocery stores.

“Elements of the Biden guidelines all point in the direction of tougher merger control of more, critical scrutiny of mergers,” said William Kovacic, director of the Competition Law Center at the George Washington University, who also served as FTC commissioner under the Bush and Obama administrations.

The Ripple Effect of Corporate Mergers

If the Kroger–Albertsons merger goes through, higher prices due to a lack of competition could be an issue for not just rural Americans but those in some of the country’s biggest urban centers. A Kroger spokesperson, pushing back, said: “The merger will also mean lower prices and more choices for fresh food for customers and more investments in our communities.”

Historically, however, that has not been the case with mergers. And further consolidation would mean major repercussions for the people who work for these stores too. In Denver, Albertsons and Kroger alone control 44 percent of the market share. In Chicago, they control 25 percent; in Seattle, almost 36 percent. The grocery business is already so concentrated that employment options would otherwise be limited.

“The case emphasizes the impact on organized labor and on workers in a variety of settings. A major concern of the FTC and looking at the transaction is that the merger will diminish competition for the laborers who work in these stores,” Kovacic said.

For its part, Kroger said it is “committed to protecting good-paying union jobs” as part of this merger. In a statement, a spokesperson told Slate: “Kroger’s merger with Albertsons will mean workers gain from $1 billion in higher wages, expanded benefits, long-term job security, and a strong unionized workforce.”

Kroger’s promises would be a major shift from the chain’s current reputation and from what independent experts suggest.

In 2022 the Colorado attorney general filed a lawsuit against the two companies, asserting that they had allegedly “colluded to suppress the wages and benefits of their workers” amid a grocery worker strike at 78 locations of the Kroger-owned King Sooper stores. According to the suit, Albertsons agreed not to hire any striking Kroger employees.

Just last month, thousands of workers voted to authorize a strike over wage and hour disputes at the Kroger-owned Food 4 Less. And a report from the Economic Roundtable found that 14 percent of Kroger workers are experiencing or have experienced homelessness in the past year. The Economic Policy Institute says that the merger could result in $334 million in lost wages, affecting roughly 746,000 workers.

“A merger like this is likely to erode real wages,” Dickens, the Northeastern professor, told Slate.

Kroger’s spokesperson said, “If the merger is blocked, the non-union retailers like Walmart and Amazon will become even more powerful and unaccountable.”

BothWalmart and Amazon have been accused of union busting over the years. Some Amazon workers have successfully been able to unionize.

In order to assuage the FTC’s monopoly concerns, Kroger and Albertsons made efforts to scrap some locations in their portfolio, divesting from 579 stores to C&S Wholesale, but that might not be enough.

“There’s some controversy as to whether the divestiture and the new buyer are equipped even to compete directly with Kroger postmerger,” said Felix Chang, a law professor and co-director of the Corporate Law Center at the University of Cincinnati College of Law. “The divest itself might not even be sufficient.”

It’s much like when Albertsons acquired Safeway stores, added Chang. In order for the merger to go through, Albertsons divested from 168 stores—146 went to Haggen, a mom-and-pop grocery chain based in the Pacific Northwest.

The deal looked great for Haggen’s majority shareholder at the time, the private-equity firm Comvest. The 2014 Haggen deal expanded its footprint with a chance to become a national power player in a grocery sector that was otherwise consolidating.

Less than a year after Haggen paid roughly $1.4 billion for the stores, the company filed for bankruptcy and sued Albertsons for $1 billion, alleging that the chain had taken part in “coordinated and systematic efforts to eliminate competition and Haggen as a viable competitor.” Albertsons settled the lawsuit for only $5.7 million. And after all was said and done, Albertsons got some of those stores back.

In the end, no matter the industry, only big names are able to compete—they can lower prices and eat up some lost revenue, while the little guys just cannot. But, Chang said, “if they’re too consolidated, they are more vulnerable to shocks to the supply chains,” such as a massive recall or an avian flu outbreak.

The concerns among regulators and the long-term fights between Washington and the C-suite could take years. That doesn’t change the reality for consumers like Anderson, who buy groceries every week. Cost-of-living issues have always been a major concern for voters, and knowing that their president isn’t going to support making their groceries more expensive could heavily sway their vote.