WASHINGTON — The US Federal Trade Commission on Feb. 26 is suing to block the Kroger Co.’s proposed $24.6 billion acquisition of the Albertsons Cos. Inc., alleging it is anti-competitive.

A merger of the two supermarket chains would eliminate competition between them, leading to higher prices for groceries and other items as well as lower quality products and services, according to the FTC, which added it also would erase competition for workers.

“This supermarket mega merger comes as American consumers have seen the cost of groceries rise steadily over the past few years,” said Henry Liu, director of the FTC’s Bureau of Competition. “Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today.

“Essential grocery store workers would also suffer under this deal, facing the threat of their wages dwindling, benefits diminishing and their working conditions deteriorating.”

Cincinnati-based Kroger pointed to past mergers, saying it invested over $125 million to lower prices following a merger with Harris Teeter and over $100 million to lower prices after a merger with Roundy’s. As a combined company with Albertsons, Kroger plans to invest $1 billion for higher wages and comprehensive benefits.

“Kroger’s business model is to take costs out of the business and invest in lowering prices for customers,” Kroger said. “Kroger has reduced prices every year since 2003, resulting in $5 billion invested to lower prices and a 5% reduction in gross margin over this period.

“This business model is immediately applied to merger companies. Kroger has a proven track record of lowering prices so more customers benefit from fresh, affordable food, and our proposed merger with Albertsons will mean even lower prices and more choices for America’s consumers.”

The Kroger Co. on Oct. 14, 2022, first announced it was acquiring Albertsons Cos. LLC for approximately $24.6 billion. The proposed deal at that time would have encompassed 4,996 stores, 52 processing plants, 66 distribution centers and approximately 710,000 employees. The combined company would have had an estimated $210 billion in sales and $3.3 billion in earnings.

Hoping to move the merger forward and gain regulatory approval, Kroger and Albertsons on Sept. 8, 2023, announced a definitive agreement on divestitures under which C&S Wholesale Grocers, LLC would acquire 413 stores, 8 distribution centers, 2 offices and 5 private label brands.

The proposed divestitures ignore affected regional and local markets where Kroger and Albertsons currently compete, according to the FTC, adding that in areas where there are divestitures, the proposal fails to include all the assets, resources and capabilities that C&S would need to replicate the current competitive intensity between Kroger and Albertsons.

Kroger on Feb. 26 responded that Kroger and Albertsons have taken steps for C&S to operate the stores, including a network of stores supported by two regional headquarters, banners and private label brands, and an operational infrastructure.

Currently, most workers for Kroger and Albertsons belong to the United Food and Commercial Workers (UFCS) union. The combined company of Kroger and Albertsons would gain more leverage of workers and the union, according to the FTC. Kroger responded the divestiture plan will maintain all current collective bargaining agreements.