Sens. Mike Lee, R-Utah, and Amy Klobuchar, D-Minn., the top lawmakers in the upper chamber's antitrust committee, on Tuesday raised concerns over Albertsons' merger with Kroger, questioning whether the companies can fulfill commitments to lower prices and increase employee wages, reports The Hill.
"The companies assure us that this is the merger that will make everything better," Lee, ranking member of the Senate Judiciary Subcommittee on Competition Policy, Antitrust and Consumer Rights, said during a hearing on the planned $25 billion merger.
"They have announced commitments to spend $500 million to lower prices, $1.3 billion to update their stores and a billion dollars to increase employee wages. Of course, they haven't explained how we can be sure that these commitments will actually be fulfilled."
Klobuchar, chair of the committee, said she worried the deal would mean a loss of competition in groceries and, potentially, higher costs at a time when inflation is already high.
"That's why you've heard concern across the country about this transaction," she said.
The deal will be reviewed by the Federal Trade Commission to ensure it is legal under antitrust law.
Stores under the Albertsons umbrella include Balducci's, Haggen, Kings, Safeway, Star Market, Tom Thumb, United Supermarkets and Vons, among others. Kroger owns Baker's, Dillons, Fred Meyer, King Soopers, Mariano's, Pick'n Save and Ralphs.
Klobuchar and Lee, the top Republican on the panel, both pointed to Albertsons' 2015 purchase of Safeway as a cautionary tale.
In that case, the companies were forced to sell 168 stores to ensure that competition would remain fierce and prices would not rise. The divestiture failed, and Albertsons bought back dozens of stores.
The companies, knowing this new tie-up would be controversial and that antitrust enforcement has become tougher, offered an aggressive plan aimed at resolving concerns when they announced the deal, which would bring nearly 5,000 stores under one corporate umbrella.
The grocers said they expected to sell between 100 and 375 stores ideally to outside buyers but could also put them into a new company that would be owned by Albertsons' shareholders. UBS has said it believes the plan will satisfy antitrust enforcers.
This plan could force the FTC to not only prove in court that the transaction is illegal but that the proposed remedy is inadequate.
Information from Reuters was used in this report.
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