FOR IMMEDIATE RELEASE

Feb. 26, 2024

CONTACT
Carter Dougherty
carter@ourfinancialsecurity.org

FTC Suit to Block Kroger-Albertsons Merger a Vital Step after Private Equity Looting

Washington, D.C. – The lawsuit to block the merger of Kroger and Albertson, marks a critical step in safeguarding workers, consumers, and competition in the grocery business. This merger between two of the country’s largest grocery chains is bad news for all stakeholders, particularly in light of Albertsons’ $3.7 billion payout to private equity firm Cerberus Capital Management shortly after the merger was announced in 2022.

Cerberus, then Albertson’s largest and most influential shareholder, orchestrated the massive dividend payout, a financially irresponsible move that equaled about half of the company’s outstanding debt at the time. This came after Albertsons reported its pension funds were underfunded by $4.7 billion in 2021. 

“The FTC clearly needed to intervene in this merger,” said Andrew Park, senior policy analyst at Americans for Financial Reform Education Fund. “Albertsons’s former private equity owners are the only winners here, while shoppers, workers, and lenders to Albertsons are all getting harmed by this unjustifiable dividend and predatory merger.”

The lawsuit, brought by the Federal Trade Commission and state attorneys general (including for the District of Columbia) comes after a coalition of United Food and Commercial Worker locals, which represent thousands of Kroger and Albertsons workers, led opposition to the merger. A coalition letter to FTC chair Lina Khan, signed by AFREF, called the dividend payment a “monopolistic machination” that “exacerbates income inequality, with private equity pocketing billions of dollars while many thousands of workers are poised to earn less and consumers to pay more for the essentials of living.”

Although the dividend payout to Cerberus was opposed by six state attorneys general in 2022, the payout stood after the Washington Supreme Court declined to take up the case in January 2023. AFREF documented the harm of the payout, which was 57 times higher than any previous dividend payment Albertsons had made. 

AFREF also detailed the harms of private equity-driven mergers in extensive comments to the FTC and Department of Justice on new merger guidelines finalized in December 2023. Private equity takeovers account for three-quarters of mergers that are reportable to the FTC and the industry uses numerous strategies to amass market power, including “roll-ups” of smaller companies in a specific sector, holding minority stakes in multiple companies, and wielding outsized buyer power in labor markets. 

“The FTC complaint highlights the anticompetitive anti-worker elements of the proposed merger, which has been a hallmark of private equity retail roll-ups for years,” said Patrick Woodall, senior fellow at AFREF.

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