Looming Kroger-Albertson’s Challenge Exposes Antitrust Hypocrisy

It is no secret the federal government has very little love in its heart for big American businesses, or the workers receiving paychecks. In the last handful of months alone, antitrust enforcers at both the Department of Justice (DOJ) and the Federal Trade Commission (FTC) have gone after Apple, Google, Meta, and Microsoft. Add to the top of that list the FTC’s recently unsealed suit against Amazon. That means the federal government is now actively going after five of the top six most valuable American companies in terms of market capitalization. The FTC now has grocery chains locked in on their sights. All of this is funded by taxpayers agencies continue their antitrust march.

This antitrust wave is spearheaded by FTC Chair Lina Khan and the head of the DOJ’s antitrust division, Jonathan Kanter. However, with Chair Khan laying the groundwork for another suit against the proposed merger of supermarket chains Albertson’s and Kroger, it is clear that this movement is driven less by ideology and more by knee-jerk reactionism that casts any growth in the size of a business to be harmful to the broader economy.

Kroger and Albertson’s currently occupy ten percent and six percent of the U.S. grocery market share respectively. The combined entity would still be well behind Walmart, the national leader at 29 percent market share. Another threat to supermarkets like Kroger and Albertson’s is the rise of national discount grocery chains. Such chains now occupy 63 percent of the overall market, compared to just 37 percent for traditional supermarkets like Kroger and Albertson’s.

Among the rising competitors are chains like Aldi and Trader Joe’s – who have a complicated merger historythemselves. However, the fastest rising star is Amazon. With a number of Amazon Fresh grocery stores (and their acquisition of Whole Foods) Amazon has vaulted into the top five of U.S. grocers. They were not even in the top 15 just 20 years ago. They own five percent of the nationwide grocery market share, just $5 billion away from overtaking Albertson’s.

Traditional supermarket chains are now left with a choice amidst a flurry of dynamic, agile companies eating up their market share. They can either adapt or go bankrupt by sticking to their old ways. Kroger and Albertson’s chose the former, deciding to combine their resources to be able to scale and change their business models to be able to better compete with the Walmart’s and Amazon’s of the world.

Oddly enough, Khan began her rise in the antitrust world authoring a paper for the Yale Law Journal entitled “Amazon’s Antitrust Paradox.” Publicly, Khan and Kanter seek to combat the supposed harms to competition caused by dominant firms like Amazon. The paper even goes on to note how Amazon’s low pricing allows it to eat up market share, even while profits do not soar. This is much the same way they are pricing out supermarkets like Kroger and Albertson’s.

Of course, this is all fair play in the free market. Consumers stand to benefit as companies fall over themselves to deliver better prices and better services. They fail to do so at their own peril. Kroger and Albertson’s are in the midst of attempting to do just that. They are doing so in order to compete with a company that both Khan and Kanter would describe as a dangerous monopolistic power in the United States.

Antitrust enforcers like Khan and Kanter posit themselves as the head of a new ideological movement. As Kanter puts it, “We’re seeing a similar kind of energy just coming from a different ideological point of view — one focused on faithfully enforcing the law.” For her part, Khan said in a speech to a group of law students in DC, “This is just the very, very, very, very beginning of this work, and we need all of you to be in this movement, to be coming into government.”

However, the Kroger/Albertson’s merger gave them an opportunity to test that theory. The market delivered, responding to the threat to their market from Amazon. Instead of championing the move as the market working to sustain competition and prevent monopolization, the FTC is openly suggesting a suit to prevent it.

Alas, no, the antitrust movement happening at the FTC and DOJ is neither new nor ideological. It is a re-packaging of the “anti-monopolist” ideas of the early 20^th century Supreme Court justice, Louis Brandeis. It is also a reactionary movement that neither desires market competition nor consumer welfare. Instead, it mindlessly opposes any move that makes a reasonably large company any larger – even if it means they can compete with a company many times its size.

It is time American consumers see this for what it is. Government bureaucrats like Khan and Kanter are not looking out for their best interests. In fact, both have eschewed the notion of antitrust based around “consumer welfare.” Neither are they servicing a coherent ideological agenda. They are flailing to tear down whatever they’re able to economically. The sooner Americans in and out of government realize this, the better for taxpayers and consumers.