The American Prospect - The No Spin-Off Zone

Food systems program manager Claire Kelloway co-wrote a piece covering the C&S divestiture take down of the Kroger -Albertsons merger.

This week marks the first anniversary of one of the dumber business deals of the past few years not involving Elon Musk: the proposed merger of Kroger and Albertsons, two massive supermarket rollups at the vanguard of the debate over greedflation. Separately, the two companies each control thousands of stores; together, they generate nearly a quarter-trillion dollars in annual sales. Kroger and Albertsons were a huge part of the reason public approval of the grocery industry plummeted 14 points to 40 percent in the year leading up to the merger announcement.

And so when these two beloathed behemoths announced their intention to merge last October—and to pay Albertsons’ private equity owners Cerberus and Apollo a $4 billion dividend in the process—the backlash was swift, bipartisan, and in certain ways unprecedented. Multiple state attorneys general sued to stop Albertsons from paying the dividend, something that had never really happened before. (Their attempts were unsuccessful but courageous.) The Senate Judiciary Committee hauled both companies to Capitol Hill, where they promised under oath to reinvest every last cent they saved maximizing “efficiencies” into lowering prices for consumers.

But Albertsons and Kroger did one shrewd thing: They set the timeline for closing the transaction so far into the future that the overburdened Federal Trade Commission could take its time deciding whether and how to challenge the merger. In the meantime, the two companies are attempting to quietly change the narrative about themselves and the industry they’re trying to dominate. Kroger hired John Boehner and a former executive director of the Congressional Black Caucus to mollify the Capitol Hill backlash, and won a critical endorsement from Sen. Sherrod Brown (D-OH). Albertsons tempered its aggressive markups; overall grocery inflation, an astonishing 13.5 percent year over year when the merger was announced, eased to 3 percent.

Read full article here.