Kroger and Albertsons have argued that their planned $24.6 billion merger will bring lower prices to customers.
That's something the federal government and several states have pushed back on. The Federal Trade Commission, which appears to not be aware that Walmart (WMT) , Target (TGT) , and Amazon (AMZN) exist, has sued to block the merger because it believes combining the two massive grocery chains would lead to higher prices for consumers.
Related: Costco shares a key pricing edge Walmart can't match
"The proposed deal will eliminate fierce competition between Kroger and Albertsons, leading to higher prices for groceries and other essential household items for millions of Americans. The loss of competition will also lead to lower quality products and services, while also narrowing consumers’ choices for where to shop for groceries," the FTC shared on its website.
In addition, the federal agency charges that the merger would also be bad for workers.
"For thousands of grocery store workers, Kroger’s proposed acquisition of Albertsons would immediately erase aggressive competition for workers, threatening the ability of employees to secure higher wages, better benefits, and improved working conditions," the FTC added.
That's an argument that, while technically true, does not seem to acknowledge that people can buy groceries in places other than traditional supermarkets. The average American, for example, lives less than 10 miles from a Walmart and approximately 75% live within 5 miles of a Dollar General.
With the merger under intense scrutiny, Albertsons (ACI) has joined Kroger (KR) in offering a new benefit to customers, courtesy of a company owned by Shark Tank star and serial entrepreneur Mark Cuban.
Albertsons now takes Cost Plus cards
Mark Cuban's Cost Plus Drugs has a simple mission. It's aiming to bring prices down on popular drugs. It does that by negotiating for large supplies of various medications and then follows a simple system for selling them to customers.
"Every product we sell is priced exactly the same way: our cost plus 15%, plus the pharmacy fee, if any. When you get your medicine from Cost Plus Drug Co., you’ll always know exactly how we arrived at the price you pay. And as we grow and our costs go down, we will always pass those savings on to you," the company shared on its website.
Kroger has been accepting the Cost Plus Card in its pharmacies for months, and Albertsons has now signed on as well. The drug company shared how the process works on its LinkedIn page. Cost Plus calls its card for local pickup the Team Cuban card which is free to anyone who signs up.
- Sign up and find nearby pharmacies - https://lnkd.in/gSq6Sjfb
- Search available medications - https://lnkd.in/gDFSr7qi
- Download your card (download link emailed to you within 48 hours)
- Have your doctor send your prescription to an affiliate pharmacy.
- Show your Team Cuban Card when you pick up your prescription!
The pharmacy at both chains charges an $8 processing fee, which they get to keep.
"The Team Cuban Card is not a discount card, it is a benefit card that can only be used at Cost Plus Drugs Affiliate Pharmacies. Each Team Cuban Card is linked to an individual user with a unique ID number," the company added.
Kroger and Albertsons face merger hurdles
Kroger has made it clear that it believes the merger will be good for customers of both chains.
"Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores. This merger advances our commitment to build a more equitable and sustainable food system by expanding our footprint into new geographies to serve more of America with fresh and affordable food," said Kroger CEO Rodney McMullen who will keep that job with the combined chain.
The FTC does not agree, and the federal agency is unimpressed with the company's offer to divest some stores in the name of competition.
"FTC’s administrative complaint alleges that Kroger and Albertsons’s inadequate divestiture proposal is a hodgepodge of unconnected stores, banners, brands, and other assets that Kroger’s antitrust lawyers have cobbled together and falls far short of mitigating the lost competition between Kroger and Albertsons," the agency shared.
If the merger gets completed, Kroger and Albertsons would operate more than 5,000 stores and approximately 4,000 retail pharmacies and would employ nearly 700,000 employees across 48 states. Walmart has 1.6 million U.S. employees while Target has roughly 400,000, and Dollar General (DG) has over 170,000.
Publix, a regional supermarket chain that would be a major competitor of the combiner Kroger and Albertsons, has over 250,000 workers.
