merged company would reduce competition, and thus be free to raise prices even more. Observers say that is unlikely, however, especially given the intense competition that Kroger and Albertsons face from Walmart, Costco, Aldi and other low-price operators. Still, the Federal Trade Commission will likely look at market share on a market-by-market basis to deter- mine where the companies will have to divest individual locations. The challenge will be finding buyers for those stores. Kroger and Albertsons have already suggested that they will spin off between 100 and 375 stores to satisfy regulators, and form a new company that would be able to compete on its own. Several observers have suggested that they may need to spin off even more stores, and that cobbling together a viable company made up of discarded stores could be difficult. “In Southern California, for example, Albertsons and Kroger have about 540 stores altogether, and maybe as many as a third of them might have to be spun off,” one observer said. That’s in part because Walmart has a limited presence in Southern California, compared with markets such as Dallas, where Kroger and Albertsons also both operate, but Walmart has a much stronger presence and would be seen as a competitive counterbalance. Kroger, which is based in Cincinnati, has a strong presence in the Midwest and along the Mid-Atlantic coast, The companies said the merger would generate an annual run rate of about $1 billion in synergies after the first four years.

A Kroger supermarket in Indianapolis, Indiana

billion for the fiscal year that ended Feb. 26, 2022, and operating income of more than $2.4 billion. The companies said the merger would generate an annual run rate of about $1 billion in synergies after the first four years, in areas such as purchasing not-for-resale goods, technology, supply chain and manufacturing, and general and administrative costs. The biggest question mark surrounding the proposed merger is whether or not federal antitrust regulators will allow the merger to take place, especially at a time when grocery price inflation is rising, with prices up 12.4% in October, compared with a year ago. The fear is that the

Vision Magazine 13

December 2022

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