The Kroger-Albertsons merger could be a disaster for buyers, warn the experts

This decision could increase the already high prices and harm local channels.


Kroger and Albertsons, two of the biggest names in the grocery space, continue a major fusion . The Deal has progressed Since it was announced for the first time in October 2022, according to The New York Times , but it is still far from a safe thing. In fact, Washington Analysis, a research company focused on regulatory policies, currently predicts 35% of them to succeed. Kroger and Albertsons presented the agreement as a beneficiary for all those involved - including customers - but experts are not so safe. Read the rest to know why some say that the Kroger-Albertsons fusion could be a disaster for buyers.

Read this then: Walmart is under fire for allegedly double charging customers .

It is feared that the grocery giant will close the stores.

A store front sign of the grocery store Albertsons
David Tonelson / Shutterstock

In a press release of October 14, 2022, the two companies announced the merger agreement , where Kroger would buy Albertsons - the parent company of 24 channels, notably Acme, Vons, Safeway, Jewel -Osco and Shaw - for 24.6 billion dollars. Kroger and Albertsons are already the two largest grocery chains in the United States, according to The New York Times , but together, they would be more in line with Walmart.

The agreement requires the approval of the Federal Trade Commission (FTC) and companies will probably have to store To secure it, J.P.Morgan analyst Ken Goldman said Pymnts in October. This would seriously affect the west coast, where Albertsons and Kroger have a dominant presence, but buyers in the country could feel the effects.

In a declaration at Better life , a Kroger representative denied that there would be closures.

"Kroger will not close any stores, distribution centers or manufacturing facilities following this merger, including stores that may have to be sold to obtain regulatory approval," said the spokesperson. "We will work with the Federal Trade Commission to develop a thoughtful divestment plan, either through disinvestment stores to solid buyers, or by creating an independent autonomous business. Kroger intends to position a store that does not part of the combined society to succeed in the future. "

Prices could increase if the merger is approved.

man looking at receipt
Denys Kurbatov / Shutterstock

With the inflation that rages, it is painful to understand even more in the grocery store at the moment, but the experts warn that this could happen when Albertsons and Kroger are uniting their strengths. The merger itself might not to cross until 2024, by The New York Times , but if this is the case, there could be a runoff at the consumer level. AE0FCC31AE342FD3A1346EBB1F342FCB

Michael Needler Jr. , president and chief executive officer of Fresh Encounter, a chain of 98 grocery stores based in Findlay, Ohio, spoke with The New York Times on his concerns. He fears that the merger can increase prices and make even more difficult for small chains to store their shelves. According to Eidler, if the largest retailers require goods, they are more likely to obtain them.

"When large power buyers require full orders, in time and at the lowest cost, this actually causes the effect of the water bed," he said at the exit. "They push down and companies for packaged consumer products have no choice but to provide them with their requests, leaving rural stores with higher costs and less availability for products."

A 2008 study published by Orley C. Ashenfelter , economist in Princeton, and Daniel S. Hosken , from the FTC, seems to confirm this. The pair is studying five mergers, four of which have increased prices between 3 and 7%. However, The New York Times Stresses that there may have been "dynamic" changes since then, and the authors have declared that their study was not representative of all the offers.

In the declaration of Better life , the Kroger representative said: "The grocery industry is constantly and fiercely competitive, and we do not expect this merger to have an impact on solid independent grocery stores which are essential to industry and vital For communities across the country. "

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The unions retaliate.

store closed sign
Whisper

According to The New York Times , the unions also dispute the merger, because store closings may be required to comply with anti-trust laws (those that prevent monopolies), which would cause job losses. Kroger could potentially Verification of 650 stores To obtain the required authorization, Wall Street's journal reported. So, they could find a third -party buyer to buy stores or create a separate business that "creates a new agile competitor" with up to 375 stores.

Here is what a Kroger spokesman said Better life The company plans to do so, but there are still fears of closures, and the employees of the two companies believe that they are facing an uncertain future.

"Will my store be the one who ends? Will my livelihood disappear?" Kyong Barry , the front-end director in a safeway in Auburn, Washington, said in a conversation with The New York Times . "It's a very scary moment for us."

Albertsons and Kroger say that merger is a positive decision.

kroger supermarket sign
Jonathan Weiss / Shutterstock

Giants of the grocery store deny that movements are underway to help investors make a profit, by The New York Times .

In the declaration of Better life , Kroger's spokesperson said: "Our merger with Albertsons offers significant and measurable advantages to American consumers, partners of the two companies and communities that we serve. As we have done in previous mergers, we will hold responsible for our associated and customer commitments, including the drop in prices from the first day after closing. We will also continue to invest in our partners by investing an additional billion dollars to increase wages and our full and cutting -edge advantages . "

Kroger and Albertsons also declared publicly than becoming a greater operation, they can low price And help customers save. But some fear that the real winners will be the Cerberus investment company and certain investors, The New York Times Underlines, because they have already made money and hope to make billions more.

Better life Albertsons also contacted to comment, but has not yet heard.


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