A Big Grocery Merger Is Off. Does That Mean Prices Will Fall? | Global News Avenue

Regulators say Kroger’s merger with Albertsons will raise grocery prices. The two companies disagree. Now the deal is done – so what’s next? It turns out things are complicated.

hook up(South Korea) and Albertson (ACI) This week, they scrapped their long-planned deal after a judge sided with Federal Trade Commission (FTC), Block bundling The rationale is that this would reduce competition and could lead to higher prices and lower wages. Grocers believe the merger would allow them to save costs, help them lower prices and better compete with retailers such as Walmart.WMT), Costco (cost) and Amazon (Amazon).

The Federal Trade Commission on Tuesday called the canceled merger a “major victory for the American people” and said the two companies’ continued competition with one another would help consumers and workers.

But things could get tougher for grocery chains, too: Bank of America analysts said this week that the news means “traditional supermarket peers are unlikely to improve (through mergers and acquisitions) in terms of national store coverage, purchasing power, and supply chain efficiency.” , omni-channel capabilities and digital advertising potential.”

What drives grocery prices?

Regardless of what happens with the merger, prices will likely continue to rise. 2023 report Government Accountability Office The study found that grocery prices increased an average of 2% per year from 2013 to 2022, with only two years of decline occurring.

The report identifies more than a dozen factors that could affect prices, including global conflicts, animal and plant diseases, and labor shortages. They are together, there is Helped drive up prices recent years. (A recent example: wholesale egg prices up 54% In November, the bird flu outbreak continued. )

A 2012 study by the Federal Trade Commission found “no single price effect” from grocery mergers because the impacts varied across the different mergers they studied. However, the study found that local competition did affect post-merger prices. In smaller communities with fewer retailers, mergers often result in higher prices, while in denser, more competitive markets, post-merger prices tend to decrease.

An assessment of the U.S. grocery store landscape found that the Kroger brand was the only competitor within five miles of more than 30% of Albertsons stores. The two of them had agree to sell More than 500 locations to address FTC concerns about mergers.

Kroger and Albertsons compete in 57 separate markets in the state, according to an analysis presented by Kroger at the Washington state trial. Following the merger, the combined entity will have an average market share of 75% in these markets and a monopoly in a quarter of them.

“Once something starts, it’s hard to put it down.”

Retailers have turn their attention to the future. Albertsons sued Kroger, accusing it of not doing enough to appease regulators and get the merger approved. Kroger said in a statement that the claims were “baseless and baseless.” Investment Encyclopedia.

In a separate statement Wednesday afternoon, Kroger says it plans to recover stock buyback It will continue to prioritize investments such as lowering prices and increasing employee wages.

President-elect Donald Trump lowers grocery prices core commitments His campaign said this week that doing so would be a difficult task.

Trump said improving supply chains and lowering energy prices are two ways he can help lower grocery prices. this United States Department of Agriculture (USDA) It is estimated that less than 9 cents of every dollar Americans spend on groceries is in energy and transportation costs.

Trump says: ‘I want to knock them down’ time. “Once something happens, it’s hard to knock it down. You know, it’s very difficult. But I think they will.”