By Russ Wiles
Add Reps. Ruben Gallego and Greg Stanton to the growing chorus of Democratic officials expressing opposition to the pending Kroger-Albertsons merger.
In an Aug. 23 letter to the head of the Federal Trade Commission, which is evaluating the proposed combination, Gallego, D-Ariz., said the deal, if allowed to proceed, could worsen competition in Arizona’s grocery sector and negatively affect food insecurity, jobs and prices.
His message to FTC Chair Lina Khan follows a letter from seven secretaries of state, including Adrian Fontes of Arizona, opposing the $24.6 billion merger of Kroger, which owns Fry’s Food Stores in Arizona, and Albertsons, which includes both Albertsons and Safeway supermarkets.
Arizona’s attorney general, Democrat Kris Mayes, has also been a vocal critic of the merger in “listening sessions” or small town halls held around the state.
Rep. Greg Stanton, D-Ariz., also issued a statement expressing concern over what a merger could mean for shoppers and workers, especially in rural and low-income areas.
"If these two chains are allowed to consolidate, they’re accountable only to their bottom line; there’ll be no incentive not to raise prices, cut wages or even close stores entirely," he said.
Other members of Arizona's congressional delegation haven't yet responded to The Arizona Republic's request for their views on the merger.
Arizona Gov. Katie Hobbs, another Democrat, told reporters that she’s watching the situation, given Kroger and Albertsons' employment clout in the state.
“We're concerned about potential loss of jobs and increasing prices, especially in rural areas that already have limited options for grocery stores,” Hobbs said.
Meanwhile, Sen. Kyrsten Sinema, I-Ariz., is “listening to Arizonans and discussing the merger with folks on all sides of the issue,” a spokesperson said.
Potentially big impact in Arizona
The seven Democratic secretaries of state, in their Aug. 16 letter to Khan, claimed a merged company would control nearly one-quarter of the grocery market nationally, reducing competition. The two companies each have about 130 stores in Arizona, and some residents worry about store closures or divestitures.
Kroger and Albertsons contend the merger would provide benefits for employees and consumers and allow the companies to stay competitive against an array of nontraditional rivals including Walmart, now the nation’s largest seller of groceries, in addition to Amazon/Whole Foods, Costco, Target and many others.
Kroger employs about 20,200 people in Arizona and Albertsons/Safeway about 14,500, although the companies have pledged no layoffs of front-line workers if the merger goes through. Nonunionized rivals Walmart and Amazon both have larger employee counts in Arizona.
Gallego has announced his candidacy for the U.S. Senate seat now held by Sinema. In his letter, Gallego said he has heard from constituents worried about the merger. He alluded to studies by the FTC and others showing that grocery-store mergers “typically lead to price increases between 3 and 7%, hurting working families and seniors on fixed incomes, in particular.”
Food deserts a concern
The proposed “conglomerate,” Gallego added, “could monopolize entire regions of Arizona, then raise prices, close store fronts and eliminate jobs." In many places around the state, he added, “Supermarkets are the largest employers, the main pharmacy and the only consistent source of nutritious food.”
In Arizona, Gallego said, 13.1% of residents already lack basic access to nutritious food, exceeding the national average of 11.8%. “Children are particularly at risk, with over 400,000 food-insecure children in Arizona,” he added. “A major contributor to food insecurity across Arizona is the tremendous distances between supermarkets in certain parts of the state.”
He cited Cochise County as one such area where supermarkets are lacking. A news release distributed by Gallego includes comments expressed concerns from the mayors of Bisbee, Douglas and Benson, all of which are located in the southeastern Arizona county.
The letter from the secretaries of state predicts a combined Kroger and Albertsons might need to divest up to 400 stores, with less-profitable outlets in lower-income communities most at risk of being sold off.
The FTC is reviewing the proposed combination, with a decision expected by early 2024.