A possible $24.6 billion deal between supermarket rivals, Kroger and Albertsons, has hit another roadblock with the U.S. government, but the CEO has pledged to cut prices by $1 billion on day one to try and save the proposed deal.
After the U.S. government’s request for a preliminary injunction that would block the deal, chief executive of the nation’s third-largest general retailer Rodney McMullen took the stand in a federal courtroom in Oregon on Wednesday as part of a three week hearing to defend the merger with Albertsons.
McMullen argued that the move would allow the company to drop prices and compete with bigger retail companies like Walmart, Amazon, and Costco.
The definitive merger agreement was first announced in October 2022 and last month the Federal Trade Commission, and states of Colorado and Washington, filed a lawsuit to stop the merger, arguing it would “eliminate competition” in the 22 states where the companies currently compete and raise grocery prices for millions during a time when Americans are already paying more due to high inflation on food.
On Wednesday, McMullen said Albertsons prices are 10 to 12% higher than that of Kroger’s and argued that the merged company could aim to shrink that gap in its new strategy to retain customers.
If combined, Albertsons and Kroger would control around 13% of U.S. grocery sales, which is still short of Walmart that currently controls nearly 22%.
