Source: United States Senator for Minnesota Amy Klobuchar
WATCH KLOBUCHAR’S FULL OPENING STATEMENT HERE
WASHINGTON – At a bipartisan Senate Judiciary Antitrust Subcommittee hearing titled, “Examining the Competitive Impact of the Proposed Kroger-Albertsons Transaction,” U.S Senator Amy Klobuchar (D-MN), Chairwoman of the Subcommittee, highlighted how the proposed merger between Kroger and Albertsons, the two largest grocery chains in the nation, may reduce competition in the grocery sector and hurt consumers.
“Over the last decade, the grocery industry has become increasingly consolidated, with the top four chains making up more than two thirds of all grocery sales. A lack of competition in the industry means higher prices and lower quality. And yet, this proposed merger, worth over $24 billion, combines the two largest grocery store chains in the country,” Klobuchar said. “If these two stores are operated by the same owner, there’s no incentive to compete for customers and prices…So that’s why you’ve heard concern across the country about this transaction.”
A transcript of Klobuchar’s full opening statement is given below. Video is available for TV download HERE and for online viewing HERE.
I call to order this hearing of the Subcommittee on Competition Policy, Antitrust, and Consumer Rights. If you note, Senator Lee, I sent him a text on the way here. We have votes at four, so I’m going to start right away, and then I saw him speaking on the floor. He will be here shortly. His staff graciously gave us the go-ahead to get started, and I know Mike cares a lot about this and he’s going to be here in a few minutes. But because of the votes at four and a number of members are going to join us, I wanted to get started.
So this hearing examines the proposed transaction to merge two of our nation’s largest grocery stores, the chains of Kroger and Albertsons. I want to thank Senator Lee and his staff for working with us on this important hearing. Whenever possible, we do things together. We don’t agree on everything, as you can imagine, but we’ve worked very hard to establish a friendship and a civil relationship on this committee. And I think that has been reflected in our bipartisan cooperation. And one of our bills that just advanced in the House regarding a number of things, but one of them is a bill that’s very important to Senator Lee, and is now headed to the Senate and actually is relevant here, which is about fees when it comes to antitrust cases with the Justice Department and the FTC. Senator Lee’s part of the bill is focused on jurisdiction when it comes to tech cases. I raise that because I think- one it’s important that we keep working together, and two, there are solutions to some of these issues outside of the hearing that we’re having today.
As I think everyone here knows, competition policy is an important priority for me, especially in industries that impact us every single day, like groceries. Over the last decade, the grocery industry has become increasingly consolidated, with the top four chains now making up more than two-thirds of all grocery sales. A lack of competition in the industry means higher prices and lower quality. And yet, this proposed merger, worth over $24 billion, combines the two largest grocery store chains in the country, that’s Kroger, and the brand names there include, among others, Kroger, Harris Teeter, Fred Meyer. Albertsons, their brands include among others Albertsons, Safeway, Shaw’s, and Vons.
Today we’re here to learn more about the proposed transaction, the status of competition among grocery stores, and the impact that this merger could have on American families.
Food prices have been rising for many reasons, and too many Americans are struggling to put affordable, nutritious food on the table. These issues are even worse for our communities, in both rural and urban areas, where people often have to travel long distances and have fewer options to get the food that they need.
One-third of all grocery stores have closed in the last 25 years, leaving over 10 percent of Americans in areas that lack easy access to fresh food. Going into a drugstore or a gas station, or even a fast food place is still not the same as going into a regular grocery store. This has serious implications for health and safety, particularly for the over six million American children who don’t have enough to eat.
Now, against that backdrop, we look at this proposed $24.6 billion merger. Consider the communities all across the country, like in Florence, Oregon, where your options are to shop at Fred Meyer – owned by Kroger – or at Safeway – owned by Albertsons. These two stores have to compete for business, meaning they will offer lower prices, deliver fresher produce, or provide convenient services like curbside pickup.
Now if those two stores are operated by the same owner, there’s no incentive to compete for customers and prices. They might even close one of the stores, and that, of course, eliminates jobs in these communities. So that’s why you’ve heard concern across the country about this transaction.
Now we have a recent example of the impact of consolidation in the grocery industry. In 2015, Albertsons bought Safeway for over 9 billion dollars, something we discussed over the phone. In order to try to preserve competition in the market, the Federal Trade Commission required the company to sell off more than 150 stores. We all know that this often happens when there’s mergers in any industry where there is competitive markets, and the merged companies overlap. But what happened here is a pretty sad tale. In less than a year, the grocery chain that bought a majority of those stores filed for bankruptcy. They couldn’t compete against the actual Albertsons down the street, and as a result, over 100 of the divested stores were closed for good and over 8,000 employees were laid off. Albertsons was allowed to buy back 29 of the stores it originally sold at a discount.
I have talked to the CEOs about this. I understand they have a different plan for divestment that they have already presented for hundreds of stores. But I think this weighs heavily on the minds of a lot of people who have concerns about this agreement just looking at the immediate past and what happened.
Divesting more than 100 stores did not work last time and this is triple, quadruple or even more, will be divested if this merger goes through. The companies have said that together they will lower prices. We appreciate that goal and statement that they will be offering fresher food, and they will improve the customer experience.
They say that the merger will allow them to better compete with Walmart, which sells about one-quarter of the groceries in America. But even if the proposed merger does result in some of the efficiencies, will it be enough to outweigh the loss of major competitors in hundreds and hundreds of communities across the country? When there’s even less competition, will Kroger still be incentivized to pass on cost savings to consumers? These questions must be answered by our witnesses today. And also, I’m sure, by the regulators that will be looking at this proposed merger.
The proposed transaction also shows – to get back to where I started – why it is important that we have antitrust enforcers who can carefully and thoroughly investigate and enforce the laws. To make sure they can do their job, we need to do our job in Congress by giving them the funding that they need. Our antitrust agencies can’t take on the increasing consolidation in our economy, whether it is grocery stores, or Ticketmaster, ask the Taylor Swift fans, or in tech with just Band-Aids and duct tape , and this applies to both the review of mergers, the enforcement of consent decrees and any other provisions and requirements that we believe as a country to ensure competition and to protect capitalism, something that has always been a focus of our economy that we want to put in place.
Right now, Senator Grassley and I, as I mentioned, have the bill to update the merger filing fees that haven’t been changed in 20 years. It basically says on big mergers, you have to pay a little more, on small mergers less, and the net gain would be very helpful to the agencies. This has been supported in the past by Trump appointees, both in the Justice Department and in the FTC, as well as Biden appointees.
The bill recently passed the House, as I noted, along with the bill that Senator Lee and I have. And we are going to push very hard to find a path forward on the bill so we can update our competition laws.
I just think it is very important to view this hearing for what it is, incredibly important to gather the information from these witnesses that will help other review by the FTC. But it is also equally important for Congress to start looking at these mergers, not just this one, but all of them and all of the consolidation we’re seeing in a bigger light and realizing these things are going to be bumping up against our consumers every single day. And if we just say “oh, this is too hard,” or “oh, someone lobbied against this,” we are not going to be doing the job that those before us did, whether it was changing the laws way, way back with Democratic and Republican support for the Sherman Act and the Clayton Act and the work that was done when it came to the AT&T breakup and the like. So just let this be a warning sign of what’s to come if we continue burying our heads in the sand. With that, I want to introduce our witnesses.
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