Ali Longwell/Vail Daily
EDWARDS — A group of around 20 local residents gathered at Colorado Mountain College on Thursday, May 4, to discuss the potential impacts of a Kroger-Albertsons merger. The meeting was part of a statewide listening tour hosted by Colorado Attorney General Phil Weiser as he reviews the merger and whether or not it violates anti-trust laws.
“There are so many threats out there. You all, as consumers, have more challenges than ever before. One of the areas that we act to protect consumers is reviewing mergers before they happen,” Weiser said. “We’re going all across the state. The people you know in Delta, Montrose, Alamosa, down in Cortez, we’re going to have sessions in all those places. We want to hear from consumers and what their views are; workers, what their views are; and suppliers, including farmers, because a lot of people can be affected.”
The proposed merger was announced in October 2022 when Kroger, which owns City Market, announced its plans to acquire Albertsons, which owns Safeway, for $24.6 billion. The deal is expected to close in early 2024 if approved by state and federal regulators.
In a statement provided to the Vail Daily, Kroger holds that the merger with Albertsons “will enable us to build on our history and bring meaningful, measurable benefits to our customers, our associates and the communities we serve.”
“As we have in past mergers, we will hold ourselves accountable to our customer commitments, including investing $500 million to lower prices, offering a broader selection of fresh products and delivering value without compromise through an expanded ‘Our Brands’ portfolio,” the statement continues.
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Further, it adds that “Kroger will not lay off any frontline associates or close any stores, distribution centers or manufacturing facilities as a result of this merger.”
On Thursday, Weiser said that the Colorado Department of Law’s review of the merger is meant to determine if it violates anti-trust law, undermines competition, and is fair to consumers, workers, farmers and suppliers.
“Mergers are disruptive,” he said.
“The anti-trust laws aren’t designed to evaluate whether or not the merger is profitable. It’s designed whether it’s anti-competitive, which means it’s harming consumers, workers, or suppliers,” Weiser later added.
The local situation
Chris Dillmann/Vail Daily
Part of building this case is collecting local data and testimony to understand what the impacts could be across the state.
“The numbers that matter are local markets. And so the work we have to do is in local geographic areas,” Weiser said.
“This merger is one that by any stretch deserves careful scrutiny. And I promise to be very rigorous and I’m going to be very focused on what it means in each local community. Because even if there’s some communities, say in Denver, where this merger doesn’t matter, that doesn’t mean it’s OK, because it’s bad for Gunnison or the Vail Valley and my job is to protect all Coloradans.”
At Thursday’s meeting, the room was filled with a cross-section of small business owners, consumers, and employees concerned as to what the impacts could be.
One individual, identifying as a supplier and small business in the valley, worried that a merger could undermine the growth of his beverage company.
“Village Market here in Edwards is an amazing little grocery store, and they are one of my bigger accounts and I need them. But in order to grow my business, I’m going to have to be getting into City Markets (and) Safeways. But if this merger happens, it is very difficult. The shelves shrink a lot more. I’m kind of wondering if you’re keeping track of small businesses like mine in the state, how much that will affect a lot of us,” he said.
There was one woman who spoke as an employee, worrying not only about job security but about the possible impacts on her life.
“I’ve worked at Safeway for almost 35 years,” she said. “And this merger is very important to me because I want to retire in the next two years. If the merger goes through, I will probably lose everything that I’ve worked there for: my benefits, my pension. It’s hard. It’s very hard.”
For those speaking as consumers, one resident summarized the concern as: “In general, I can’t think of a lot of good things that come from reducing competition.”
On this, Weiser agreed: “Competition is a good thing and anytime you have mergers that are threatening to undermine competition, it’s important that the anti-trust authorities really do their homework and take a long, hard look before they just say it’s fine,” he added.
In Eagle County, consumers have a variety of choices for groceries ranging from small independent stores (like Village Market in Edwards) to big box stores like Walmart, City Market and Safeway as well as the bulk option of Costco.
On Thursday, the validity of these choices as competitors to each other was discussed, and is something that Weiser has to evaluate in communities across Colorado in his investigation.
“When I ask the question, do you shop at City Market, Safeway or both? Most will say, I shop at both,” Weiser said. (To illustrate, on Thursday, nearly all residents in attendance raised their hands signaling that they shop at both.) “And they have different reasons why they shop at both. But they recognize they have different products, different supply chains, and different prices — and that is an opportunity for consumers that matters.”
However, it was discussed that the merger would uniquely impact West Vail, where the Safeway and City Market are located side-by-side. On Thursday, several residents stated their confidence that should this merger go forward, one of those options would close.
As one resident pointed out, this impact would not just be to Vail residents: “Eagle, Gypsum and Edwards are all bedroom communities to the hospital and the whole Vail Mountain and ski industry. So a lot of people do work up in that area and do shop in that area. It’s a long skinny valley, but there are many people who work upvalley because that’s where we make the money.”
Russ Forrest, Vail’s Town Manager, spoke at the meeting about the origin of the West Vail City Market.
“We’re the underlying landowner for City Market and we did an RFP back in the early 90s to try and get a competing grocery store to create competition,” Forrest said. “The competition was valuable in the 90s when we did this RFP and did a lease with City Market. It’s still valuable today. If a merger occurred and we had two identical stores that still could potentially be effective and have a successful business, then potentially something totally different that would be a better utilization of the land, (and) could be a better scenario.”
The process
With these listening sessions, Weiser and the department are collecting data and information from local communities. But next, “our job is to take all that information, analyze this merger, and by early 2024, we need to make a decision,” he said.
“The decision we have to be willing to make is would we challenge this merger as a violation of any trust laws? If we believe this merger is anti-competitive, we will do that.”
A violation, he later explained, would be if the merger was found to “substantially lessen competition,” with four primary types of competitive harms. This, he added, could include increased prices, less variety for consumers, harm and disruption to employees, and impacts to suppliers in getting their products on shelves with fewer options.
While Thursday’s discussion centered on the negative side effects of such a merger, one resident did ask what potential benefits could be. While Weiser said he didn’t yet know the argument, he noted that many mergers use an efficiency argument.
“An argument that is often made, which could be made here, is the companies are going to be more efficient after the merger and those efficiencies will actually make life better for consumers. That can’t just be, again cheap talk,” Weiser said, adding that it has to be shown that these efficiencies are passed down to consumers.
The merger is also being evaluated by other states and the federal government, which Weiser said means, “there’s a range of potential outcomes in terms of what they do and what we do.”
“Regardless of what they do, I have an independent obligation and I’ve got the independent authority to represent the people of Colorado and do what’s best for Colorado,” he added.
“This case is a rare opportunity for me to work on something that is relevant to people and that people understand. Most mergers, people don’t understand, they’re not sure why it’s relevant. This one deserves and has our full attention. We’re going to be working hard on it,” Weiser said.
The Colorado Attorney General is accepting public input online. To fill out the survey or share your thoughts, visit COAG.gov/GroceryMerger.
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