Mastodawn

1. Supermarket prices are up 13% in the last year and profits are at record highs

There isn't much competition to keep prices in check

Now, the nation's largest supermarket chain (@[email protected]) wants to buy the 2nd-largest (@[email protected])

What could go wrong?

https://popular.info/p/buying-the-competition

Buying the competition

Over the last year, prices for groceries are up 13%. Meanwhile, the price of food at restaurants has increased more slowly at 8.5%. Why? Restaurants are a highly-competitive industry. The grocery industry, on the other hand, has been consolidating. The total number of grocery stores in the United States "

Popular Information

Judd Legum Dec 5, 2022

@[email protected] @[email protected] 2. @[email protected] recorded a $3.5 billion profit in 2021 and projects an even larger haul, $4.9 billion, in 2022. Kroger itself has fueled the consolidation, acquiring a slew of competing chains, including Harris Teeter and Fred Meyer.

Now, Kroger wants to get MUCH BIGGER

Judd Legum Dec 5, 2022

@[email protected] @[email protected] 3. @[email protected] recently announced an agreement to purchase @[email protected], the nation's second-largest grocery store chain, for about $25 billion. Albertsons itself acquired another major competitor, Safeway, in 2015 for $9.2 billion.

https://popular.info/p/buying-the-competition

Buying the competition

Over the last year, prices for groceries are up 13%. Meanwhile, the price of food at restaurants has increased more slowly at 8.5%. Why? Restaurants are a highly-competitive industry. The grocery industry, on the other hand, has been consolidating. The total number of grocery stores in the United States "

Popular Information

Judd Legum Dec 5, 2022

4. The combined grocery behemoth that would operate nearly 5,000 stores and control 22% of the grocery market in the United States, trailing only Walmart

Kroger-Albertsons and Walmart "would control 70 percent or more of the [grocery] market in 167 cities in the United States."

Judd Legum Dec 5, 2022

5. Kroger claims the merger would benefit consumers, pledging to "invest $500 million to lower prices" over four years as part of the transaction.

Sounds good but that's $125 million per year out of $200 billion+ in revenue.

Effectively nothing.

https://popular.info/p/buying-the-competition

Buying the competition

Over the last year, prices for groceries are up 13%. Meanwhile, the price of food at restaurants has increased more slowly at 8.5%. Why? Restaurants are a highly-competitive industry. The grocery industry, on the other hand, has been consolidating. The total number of grocery stores in the United States "

Popular Information

Judd Legum Dec 5, 2022

6. An influential 2008 study "found that in four of the five mergers they evaluated, [grocery] prices appeared to have increased between 3 and 7 percent."

https://popular.info/p/buying-the-competition

Buying the competition

Over the last year, prices for groceries are up 13%. Meanwhile, the price of food at restaurants has increased more slowly at 8.5%. Why? Restaurants are a highly-competitive industry. The grocery industry, on the other hand, has been consolidating. The total number of grocery stores in the United States "

Popular Information

Judd Legum Dec 5, 2022

7. Section 7 of the Clayton Antitrust Act, enforced by the FTC, prohibits acquisitions that substantially "lessen competition" in "any line of commerce."

@[email protected] admits the merger will lessen competition in some markets and proposes divesting a few hundred @[email protected] stores

Judd Legum Dec 5, 2022

8. These divestiture schemes are used to gain approval for mergers, but seldom work. When @[email protected] bought @[email protected], it divested 168 stores to get regulatory approval.

The company that bought the stores went bankrupt in months, and Albertsons bought back a bunch of stores

Judd Legum Dec 5, 2022

9. The private equity firms that own most of @[email protected] are also trying to get a $4 billion "special dividend" from the company prior to the merger.

It would make it extremely difficult for @[email protected] to continue to operate independently

https://popular.info/p/buying-the-competition

Buying the competition

Over the last year, prices for groceries are up 13%. Meanwhile, the price of food at restaurants has increased more slowly at 8.5%. Why? Restaurants are a highly-competitive industry. The grocery industry, on the other hand, has been consolidating. The total number of grocery stores in the United States "

Popular Information

Judd Legum Dec 5, 2022

10. The $4 billion dividend is currently held up in court.

If it is approved, Albertsons "will be in the position of arguing to federal and state antitrust enforcers that it is preferable to allow Kroger to purchase its remaining assets because it is a failing firm."

Judd Legum Dec 5, 2022

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Madmansjw Dec 5, 2022

@juddlegum in the small city I live in, we had three supermarkets: Fred Meyers, Albertsons, and a Thriftway. The Thriftway was purchased and turned into a Safeway. The Albertsons closed shortly afterwards. Now, if this Kroger merger goes through, we will have gone from 3 supermarkets to 1 in about a decade. That is a problem.

Dandydan Dec 5, 2022

@juddlegum now how many politicians want the merger to go through? In Colorado we have Safeway and very few Albertson's. If merger goes through Safeway plants will close. Kroger has a dairy non union, Safeway dairy union.

Matthew Nadler Dec 5, 2022

@juddlegum That's kind of a feature, not a bug, of private equity, isn't it?

Toxteth O'Grady Dec 5, 2022

@juddlegum How about forcing Kroger to divest Harris Teeter? Or Randall's (another nameplate that disappeared after Safeway bought them). At least I know now why my groceries are more expensive, and it's anticompetitive behavior and investment managers...

Terry O’Neill Dec 5, 2022

@juddlegum Impoverishing workers and gouging consumers. Is that any way to run a …

Emmairl Dec 5, 2022

@juddlegum I’m wondering what happened to the stores they didn’t buy back? Did they go under? Did they close? We’re food deserts created by that scheme? Did it only happen in already underserved neighborhoods?
And is anyone trying to stop @Kroger

sandywb14 Dec 5, 2022

@juddlegum This happened in my city. It was devastating for the small chain of local grocery stores who went out of business. Stores are still sitting empty.

sandywb14 Dec 5, 2022

@juddlegum it’s always about money

AnellaMarie Dec 5, 2022

@juddlegum I personally haven’t been able to afford shopping at Kroger in years. I never go there. I hate Walmart. In my area that leaves Meijer. But since inflation hit it’s becoming harder to go there.

Victor Jara (Tribute)Dec 5, 2022

@juddlegum
Yes we all know that corporations love to spend money for the sole purpose of lowering prices to their consumers. That's in "Economics for Dummies", right?

Martha Howell Dec 5, 2022

@juddlegum I live in Madison, WI, called one of the most competitive grocery markets in the country. It still shocks me how high the prices are when I travel to other US cities, and how miserable the selection. I would estimate 25% higher on most products.

Charity Dec 5, 2022

@juddlegum and Kroger also owns Fred Meyer & a few others on the west coast. I'm my area this will mean Kroger or Wal-Mart if you want groceries. It should not merge.

Emmairl Dec 5, 2022

@juddlegum This is a nightmare and people don’t really understand it.

Bonnie Schwertner Dec 5, 2022

@juddlegum Albertson’s already bought out the long-time Texas chain, United Supermarket, and it had a negative effect. Now they’ll be absorbed even further.

McKennaLake Dec 6, 2022

@juddlegum
Meanwhile, they cut employees and I’ve got t scan my own groceries.
If I wanted to be a cashier again, I’d get a job. Oh, wait

Marcy Dec 5, 2022

@juddlegum NVM the immigrants, we're being overrun by the new Robber Barons.

Wait, what? 🦣Dec 5, 2022

@juddlegum
I wonder where they got the money to fund this kind of merger… oh wait… by using every possible excuse to gouge their customers.
Seems like something that should disqualify any argument that increasing their market power will be good for consumers.

REAL GJ Zig 🏳️‍🌈🇺🇸Dec 5, 2022

@juddlegum I hope @MeidasTouch @meidasjordy mention this on tonight's LIVE. This effects people over the longer term than an election.

Quest Dec 5, 2022

@juddlegum
"“I’ve been robbed at gun point, I’ve been screamed at, I’ve been hit, I’ve been push, I’ve been spit at, I’ve had merchandise thrown at me, and I have had Covid at the company. ...I’ve been on food stamps and housing. I’ve had to tell our son ‘sorry we don’t have enough money.'”"

"Kroger workers’ rate of food insecurity is seven times the national average, according to a survey released Monday by the Economic Roundtable of more than 10,000 Kroger employees"

https://nypost.com/2022/01/13/kroger-workers-strike-as-employees-cant-afford-groceries-report/

8,400 Kroger workers strike as employees reportedly can't afford groceries

More than 8,000 Kroger grocery workers have gone on strike in Colorado to push for higher wages and healthcare benefits, as a new study revealed that 75 percent of employees are food insecure.

New York Post

Quest Dec 5, 2022

William Rodney McMullen is the CEO of Kroger, the third-largest general retailer in the US, since January 1, 2014.

McMullen's salary in 2021 was listed at $1.34 million. The company's median employee salary that year was a bit more than $24,000. This indicates McMullen makes 5,348 percent of the median salary. This is one of the largest wage gaps in America.

His total compensation is much more. In 2020, his salary plus bonuses plus various stock options totaled $20,578,119.

Quest Dec 5, 2022

Examining the Competitive Impact of the Proposed Kroger-Albertsons Transaction

https://www.judiciary.senate.gov/meetings/examining-the-competitive-impact-of-the-proposed-kroger-albertsons-transaction

McMullen tries to sell his pitch using big numbers like investing over $1B in employees. Sounds nice until you realize it is over 4 years with a post merger employee count of ~700k. That makes it a ~$500/yr/employee investment for 4 years.

Examining the Competitive Impact of the Proposed Kroger-Albertsons Transaction | United States Senate Committee on the Judiciary

United States Senate Committee on the Judiciary

SFborn1940 Dec 5, 2022

@juddlegum Social Security will increase by 8.7% in 2023. It is not nearly enough to cover the actual COL increases over the past two years.

Saeed Dec 5, 2022

@juddlegum this is an example of what usually happens with capitalism- companies want to dominate and move towards monopolization. “Perfect competition between rational actors in a full transparent marketplace, with the invisible hand working its magic” is a myth

David West Dec 5, 2022

@juddlegum The same thing that always goes wrong. First they'll talk about "synergies" and "economies of scale" to receive regulatory approval. When the deal goes through they'll be billions in debt which we'll all pay for at the cash register. When they start closing "unprofitable" locations food deserts will expand. I think that about covers it...

BluePearlArts Dec 5, 2022

Interestingly I see fewer shoppers in stores & high priced items staying on shelves. That is Consumer Power - let's all use it and lose wt in the process. Support you local growers too!

🍸Pooka🥕Boo🍸Dec 5, 2022

@juddlegum What always goes wrong...

Carol Dec 5, 2022

@juddlegum I was at the grocery store yesterday. After seeing the price of eggs, I searched for the live chicken aisle.
In regards to the buyout, everything can go wrong. Kroger is huge on keeping payroll down, expect less employees, longer lines, and loss of your favorite products.

laniez Dec 5, 2022

@juddlegum eat the rich

Cassandra of Troy Dec 5, 2022

@juddlegum
Commerce dept and DOJ asleep at the wheel.

aka Mood Indigo Dec 5, 2022

@juddlegum I work at Safeway, which is owned by Albertsons. Nothing in this store works correctly including the front doors. We start at minimum wage plus ten cents and most people are lucky if they get 30 hours. Our schedules are not given until the day before the week starts. The store manager still makes unexplained changes after that. We are unionized but our local union rep never answers their phone. I can’t imagine Kroger being any better. This merger will be bad in every way.

Harry Callahan Dec 5, 2022

@juddlegum Standard Oil

Voron Dec 5, 2022

@juddlegum it’s nuts, absolutely nuts and no help in sight because the Dems won’t do anything about this and if you mention this you risk being burned at the stake for breaking solidarity.
It’s doubly crazy because if the Dems would take on economic issues like this they would crush the GOP tat the ballot box

Caesar Kent (Wordsmith)Dec 5, 2022

As a buyer for an independent grocery store, I will say that the /cost/ of goods is constantly going up, especially with the increase in gas prices and shortages of drivers, and prices have to adjust to maintain a margin.
I would also say that talk of Target, Amazon, and Walmart being competition doesn’t instill much hope. If you have the access and the means, you should be thinking of local grocery stores as the alternative. These are critical places for supporting local businesses.

OldeHippi 🦋🎨🙏🌺Dec 7, 2022

We will have no variety.