Proposed merger estimated to cost consumers up to $2 billion
WASHINGTON D.C. — The national consumer group Food & Water Watch released extensive comments highlighting the damaging effects of the proposed Albertsons-Safeway supermarket merger on consumers and farmers. The proposed merger, which was announced March 6, 2014, would be the biggest supermarket merger in history if approved. Food & Water Watch estimated that increased retail grocery concentration in the 44 markets where the two chains currently compete could increase consumer grocery prices between $900 million and $2 billion every year.
“The Federal Trade Commission must prevent this supermarket merger from allowing a more dominant Albertsons-Safeway to raise food prices for consumers who have fewer options of where to shop,” said Food & Water Watch Executive Director Wenonah Hauter. “Increased supermarket consolidation and mergers increase the cost of food for consumers and this deal comes with an estimated $1 to $2 billion annual price tag at the checkout aisle.”
The merger would eliminate rivals in many markets and give Albertsons-Safeway a dominant position in many metro areas. In 23 markets, the proposed merger would join two of the top four grocery retailers, eliminating a key competitive rivalry that has helped make grocery prices competitive. In 28 markets, the new Albertsons-Safeway would sell one-quarter of all groceries; in twelve metro areas, it would sell more than one-third of the groceries.
“Consumers cannot shop around for bargains if the FTC keeps rubber-stamping supermarket mergers,” said Hauter. “Consumers already are paying more for food and this merger will impose more price hikes when many families are pinching their pennies.”
The proposed merger would join more than 2,400 stores. The deal is bigger than the supermarket mergers of the late 1990s, including the Kroger-Fred Meyer merger (2,288 stores) and the Albertsons-American Stores deal (under 1,700). It comes on the heels of several other supermarket mergers that the FTC has approved recently, including Kroger-Harris Teeter, the reconstitution of Albertsons-Supervalu, Albertsons-United Supermarkets, Bi-Lo-Winn Dixie and Nash Finch-Spartan.
The proposed merger also would create a much larger buyer of fresh fruits and vegetables and groceries. The proposed deal could significantly harm the local and regional farmers that are selling into Safeway’s “locally grown” program. The footprint of proposed merger across the Pacific Northwest, California, the Rocky Mountains and the Northeast strengthens the leverage Albertsons-Safeway would have over the farmers selling into local and regional food systems.
“How big is big enough for the federal antitrust regulators to finally step up and protect consumers and farmers from a rapidly consolidating food and agricultural marketplace?” asked Hauter.