CINCINNATI — Ohio Attorney General Dave Yost has joined his counterparts in Alabama, Georgia and Iowa in asking a federal judge to let the Kroger Co. acquire the Albertsons Grocery Chain.
In an amicus brief filed in U.S. District Court in Oregon Wednesday, the attorneys general argued the Federal Trade Commission has a “simplistic vision of the retail grocery market” and should not be allowed to block the $24.6 billion merger.
“The FTC’s tunnel vision in this case risks chilling the very competition that it seeks to protect,” Yost said in a press release. “A full view of the competitive landscape shows no reason to delay this deal further.”
The FTC joined with seven states and the District of Columbia in a February filing that asks Judge Adrienne Nelson to block the merger with a preliminary injunction. Judge Nelson has scheduled a three-week hearing to determine whether the merger would violate federal antitrust rules. It’s a high-stakes hearing, as most mergers fizzle when a preliminary injunction is granted.
Yost is the third Ohio politician to endorse the merger. Two Democrats — Ohio Senator Sherrod Brown and Cincinnati Congressman Greg Landsman — touted the deal’s potential to preserve union jobs.
Yost argued in a 19-page brief that the FTC incorrectly identified supermarkets as the “relevant market” on which to evaluate the Kroger-Albertsons merger. He cites a 1983 ruling by the FTC that said “a considerable degree of competition exists between supermarkets and retail grocery stores selling a significant number of the same items.” Thus, he argues the deal should be evaluated not just for its impact on supermarkets, but all retailers that sell groceries, including Walmart, Amazon, Aldi and Costco.
“The acquisition will be pro-competitive,” according to Yost’s filing. “It can be expected to strengthen Kroger’s ability to compete more effectively in the wide-open market for consumers’ retail grocery dollars. It will have no impact on competition between Kroger and Albertsons in the vast majority of communities in which only one of them has stores.”
The FTC’s legal team has an answer to this argument. It was summarized in a pretrial brief to the commission on July 31. That document describes an analysis conducted by Dr. Nicholas Hill, an expert witness likely to testify in the federal case.
Hill conducted an analysis that assumed supermarkets as the relevant market. But he also ran the numbers including “large format stores” like supercenters, club stores, natural and gourmet food stores and limited assortment stores. Hill found the merger is “presumptively illegal” in 1,928 supermarket markets and 1,785 large-format store markets.
“In other words, even if (Kroger and Albertsons) are right that the appropriate product market here must include all large format stores, Dr. Hill’s analysis shows the merger is still presumptively illegal in many hundreds, if not thousands, of markets,” according to the FTC filing.
