The parent companies of 2 of Alaska’s grocers want to merge. Here’s what we know.

Shoppers travel and spell from Fred Meyer and Carrs stores that look each different crossed nan Seward Highway successful Midtown Anchorage connected Thursday, Aug. 8, 2024. The genitor companies of nan competing businesses, Kroger and Albertsons, want to merge. (Matt Faubion/Alaska Public Media)

Last week, Alaska Congresswoman Mary Peltola joined 27 different D.C. lawmakers from 16 states successful a ineligible little backing a lawsuit by federal regulators to artifact a massive, nationalist market shop merger. 

Most Alaskans unrecorded successful a community wherever a Fred Meyer shop competes straight pinch a Carrs aliases a Safeway, truthful nan connection for 1 genitor institution to bargain nan different for $24.6 cardinal has a batch of Alaska consumers worried. 

Here’s what we cognize astir wherever nan connection is now, aft it was first announced successful October of 2022. 

What’s astatine stake? 

If you return what nan companies are saying successful bully faith, not much. They’ve made sweeping promises astir nan bully things that will hap and nan bad things that won’t if Kroger, which owns Fred Meyer, is allowed to bargain Albertsons, which owns Safeway and Carrs. The companies opportunity investors, customers, workers and communities are each expected to benefit. 

“We are assured our transaction pinch nan projected divestitures will mean little prices and much choices for customers,” Kroger CEO Rodney McMullen said successful a video astir nan projected merger. “It will mean much opportunities for unit associates to turn their profession while we unafraid nan early of bully paying national jobs.”

Here are immoderate of nan circumstantial promises Kroger and Albertsons person made: 

• No shop closures
• No drugstore closures
• No front-line occupation losses pinch protection for worker salary and benefits
• A $500 cardinal finance successful reducing prices
• A $1 cardinal finance successful worker benefits
• A $1.3 cardinal finance to amended Albertsons stores

Kroger points to its 20-year way record that includes lowering its profit margins to support prices down amid past acquisitions.

How tin each of these promises beryllium possible? 

The thought is if Kroger and Albertsons merge, they’ll beryllium successful amended style to compete pinch moreover bigger retailers, for illustration Costco and Walmart, arsenic good arsenic growing competitors, for illustration dollar stores that now waste groceries and moreover Amazon. Bigger standard intends bigger efficiencies, and that’s wherever nan upside is expected to travel from.

Of course, astir Alaskans unrecorded successful communities wherever Fred Meyer competes pinch Carrs aliases Safeway. Specifically, that’s Anchorage, Eagle River, Palmer, Wasilla, Fairbanks, Juneau and Soldotna.

Federal regulators are wary of mergers because they tin beryllium anticompetitive, concentrating excessively overmuch marketplace powerfulness and hurting regular shoppers. To effort to triumph regulators’ approval, Kroger and Albertsons opportunity they’re prepared to waste disconnected each 15 of nan Carrs and Safeway stores successful those Alaska communities, positive 3 much successful Girdwood, Kenai and North Pole, to a institution called C&S Wholesale Grocers based successful New Hampshire. 

The Safeways successful Seward, Valdez, Kodiak, Ketchikan, Nome and Unalaska are not connected the divestment list and would stay pinch nan merged company.

Nationally, Kroger and Albertsons scheme to waste a full of 579 stores, positive six distribution centers and a dairy plant, to C&S. 

Again, McMullen says these divested stores won’t close, because C&S is committed to moving them arsenic they are today. 

Albertsons CEO Vivek Sankoran says C&S will make nan scenery much competitive. 

“Their heavy manufacture knowledge and acquisition gives america awesome assurance successful their expertise to go moreover fiercer competitors moving forward,” Sankoran said successful nan video. 

C&S CEO Eric Winn besides says his institution is playing nan agelong game.

“We are assured this expanded divestiture package will supply nan stores, supporting assets and master operators needed to guarantee these stores proceed to successfully service their communities for galore generations to come,” Winn said in an April property release.

The United Food and Commercial Workers Local 555, which represents 30,000 market shop workers successful Oregon, Idaho and Washington, came retired successful support of nan merger successful February. However, nan genitor union, which represents 1.2 cardinal workers, voted past twelvemonth to reason nan merger. Other UFCW locals, including Alaska’s, besides reason nan merger. 

So what’s nan problem? Why do group reason nan merge?

Basically, opponents conscionable don’t judge nan companies, and location isn’t thing successful spot to clasp them to their promises. 

In Alaska, nan opponents see Democratic Congresswoman Mary Peltola, 24 authorities lawmakers, the market shop workers’ union and lots of regular Alaskans.

“It’s a immense rumor for Alaskans that resonates. It’s not a governmental issue, it’s a pocketbook issue,” said Veri di Suvero, executive head of nan Alaska Public Interest Research Group, a statewide user defense nonprofit that also opposes nan merger. “Whether aliases not it’s successful bully faith, astir these spinoffs, we’ve seen complete and complete again that they don’t work.”

Di Suvero points backmost to 1999, erstwhile Safeway bought retired Carrs. AKPIRG and Alaska’s lawyer wide sewage involved, and they worked retired a woody to waste disconnected 7 stores to fto nan merger spell through.

Six of those stores became Alaska Marketplace market stores. They all closed wrong astir a year. 

The seventh, astatine nan University Center promenade successful Midtown Anchorage, survived and became a different market store, Natural Pantry, which yet outgrew nan space and built its current, standalone location disconnected 36th Avenue.

Fast guardant to 2015, and Safeway sewage swallowed up by Albertsons. Federal regulators approved that deal aft nan companies agreed to divest 168 stores. 146 went to a mini Washington market retailer called Haggen. 

Haggen wasn’t successful, either. Within a year, Haggen sued Albertsons and accused it of sabotaging stores it bought. It sewage sued backmost by Albertsons and filed for bankruptcy. In nan ensuing firesale, Albertsons ended up buying backmost galore of its divested stores, and yet what remained of Haggen itself. 

Di Suvero is besides concerned astir really unsocial Alaska’s proviso concatenation is, peculiarly its dense dependence connected a azygous port. Di Suvero and different opponents mobility if C&S has nan expertise and wherewithal to measurement successful and tally its caller market stores successfully.

So critics deliberation C&S is mounting itself up for failure, for illustration Haggen?

Yes.

C&S isn’t a nationalist subordinate successful nan world of unit groceries. It owns nan Piggly Wiggly marque and runs immoderate Piggly Wiggly stores directly, but astir are independently owned and operated nether a franchise license. It besides runs 11 Grand Union markets.

But C&S is simply a large woody nationally successful market wholesaling, supplying much than 7,500 supermarkets. Forbes says it’s an manufacture leader successful proviso concatenation innovation, nan largest wholesale market proviso institution successful nan state and nan eighth biggest privately held institution successful nan country. So C&S is successful a wholly different convention from Haggen. 

That said, nan Federal Trade Commission says C&S doesn’t person its ain shop marque merchandise lines, loyalty programs aliases e-commerce platforms it needs to successfully compete. 

Does Alaska fig prominently into nan wide merger? 

No. 

Kroger and Albertsons mixed person 36 stores successful nan state. That’s 11 Fred Meyers, and 24 Carrs aliases Safeways positive Crow Creek Mercantile successful Girdwood. Across nan country, they person astir 5,000.

And dissimilar successful nan Safeway-Carrs merger successful 1999, nan governor’s agency has been hands off. Gov. Mike Dunleavy has not weighed in. The authorities Department of Law, which has its ain consumer protection unit, says it’s monitoring nan merger and nan Federal Trade Commission’s legal conflict to extremity it. 

Outside of Alaska, 8 states and nan District of Columbia person joined nan FTC’s suit successful national tribunal successful Oregon.

And nan attorneys wide of Colorado and Washington person their ain akin lawsuits. 

What happens if nan merger gets changeable down? 

There’s a batch invested successful this merger. A reporter pinch WCPO successful Cincinnati, wherever Kroger is headquartered, dug done financial filings and recovered that done March, nan 2 genitor companies had already spent $864 cardinal successful merger-related expenses. 

WCPO besides recovered that Kroger had agreed to salary Albertsons $600 cardinal if nan merger fails. 

So that’s a large inducement for Kroger to entreaty if these ineligible fights don’t spell its way. 

So what’s next?

The legal stuff. 

Hearings successful nan FTC lawsuit astatine nan U.S. District Court of Oregon statesman Aug. 26. This lawsuit is important, but won’t needfully make aliases break nan merger. The judge location is expected to norm connected whether aliases not to region nan merger, while more substantive arguments spell earlier an administrative rule judge successful Washington, D.C. 

The proceedings successful nan Washington authorities tribunal is scheduled to statesman Sept. 16, and, separately, a Colorado authorities judge past period imposed his ain bid to region nan merger, pending a ineligible situation there. That proceedings is scheduled to statesman Sept. 30.