MICHEL MARTIN, HOST:
The biggest supermarket merger in U.S. history is in the hands of a federal judge.
A MARTÍNEZ, HOST:
Government regulators are asking a district court in Oregon to stop the proposed deal that would combine Kroger and Albertsons, the two top supermarket chains in the nation. The plan merger has been under review for almost two years.
MARTIN: NPR'S Alina Selyukh has been following this, and she's right here with me now. Good morning.
ALINA SELYUKH, BYLINE: Good morning.
MARTIN: Why is this merger so controversial?
SELYUKH: It touches on the hottest topic of the year - grocery prices. These are also stores we're all familiar with. They're called different things in different parts of the country. Kroger owns Fred Meyer, King Soopers, Harris Teeter, bunch of others. Albertsons owns Vons and Safeway. That's why this deal is so big. It's worth $25 billion. The government lawyer actually said over 100,000 people submitted public comments on the merger to the Federal Trade Commission, unprecedented interest for this agency. And the opening statements during the hearing had one overarching theme, which I think goes to the heart of the case, which is, will combining two of the largest supermarket chains into one lead to higher prices for shoppers?
MARTIN: So let's hear the arguments on both sides. Take us through it.
SELYUKH: OK, so the Federal Trade Commission argues prices will go up. You start with two competitors that constantly watch each other's prices. You take one of those competitors away. That's more power for the new grocery giant, fewer options for shoppers. Now, the companies say that Kroger actually already has lower prices than Albertson's and will invest in dropping those Albertson's prices immediately. And then they raise an existential question of, are they really that big when you think about how Americans shop for groceries?
MARTIN: That's interesting. So who are they talking about here?
SELYUKH: You know, the amount of times that Walmart came up on the first day of this case was staggering. Kroger and Albertsons name dropped every store under the sun, Walmart, Costco, Amazon, Trader Joe's, discounter Aldi, even Dollar General and Walgreens. The companies argued, these are the biggest threat. They kept saying, they are two regional chains, which they are. But national giants, like Walmart and Costco, have much bigger sway over suppliers. They buy food at lower prices to begin with, and that only together can Kroger and Albertsons go nationwide and compete with them. Albertson's lawyer actually went as far as to say that if Kroger is not allowed to buy it, Albertsons could wither over a few years.
MARTIN: So what's the federal regulators' take on those claims?
SELYUKH: The government argues, these stores are not the same. They do not replace your local supermarket where Kroger and Albertsons often compete head to head. For example, you have to pay for membership at Costco. Selection is much smaller at dollar stores or Trader Joe's. And if you buy a soda and a candy at a CVS, you'll still go to your nearest grocery store.
MARTIN: So Alina, it sounds like this case is mostly focused on the impact on consumers, is that right?
SELYUKH: Yes, mostly on shoppers, but government lawyers are putting focus on workers, too, which is new for a case like this. Kroger and Albertsons are union shops, which is rare in the world of grocers. And they say that if they can't compete against Walmarts of the world, that's a win for non-union employers. The government argues a merger would give them more power over union negotiations, give workers fewer options. So there are questions about impact on competition for workers.
MARTIN: So before we let you go, is there any sense of how this case is going?
SELYUKH: It will be a slog. This one will be a few weeks. There are actually three lawsuits in total trying to stop the deal and one sort of countersuit from Kroger against the federal government. And it's all coming to a head right when everyone is talking about high grocery prices, including presidential candidates.
MARTIN: That is NPR's Alina Selyukh. Alina, thank you.
SELYUKH: Thank you. Transcript provided by NPR, Copyright NPR.
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