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FTC, States Sue to Block Kroger Acquisition of Albertsons

The Federal Trade Commission on Monday, Feb. 26, sued to block the largest proposed supermarket merger in U.S. history—Kroger Company’s $24.6 billion acquisition of the Albertsons Companies, Inc.—alleging that the deal is anticompetitive. The Offices of the Attorneys General of Arizona, California, the District of Columbia, Illinois, Maryland, Nevada, New Mexico, Oregon and Wyoming are joining the commission’s federal lawsuit.

The FTC charges that the proposed deal will eliminate fierce competition between Kroger and Albertsons, leading to higher prices for groceries and other essential household items for millions of Americans. The loss of competition will also lead to lower quality products and services, while also narrowing consumers’ choices for where to shop for groceries. For thousands of grocery store workers, Kroger’s proposed acquisition of Albertsons would immediately erase aggressive competition for workers, threatening the ability of employees to secure higher wages, better benefits, and improved working conditions.

“This supermarket mega merger comes as American consumers have seen the cost of groceries rise steadily over the past few years. Kroger’s acquisition of Albertsons would lead to additional grocery price hikes for everyday goods, further exacerbating the financial strain consumers across the country face today,” said Henry Liu, Director of the FTC’s Bureau of Competition. “Essential grocery store workers would also suffer under this deal, facing the threat of their wages dwindling, benefits diminishing, and their working conditions deteriorating.”

The FTC issued an administrative complaint and authorized a lawsuit in federal court to block the proposed acquisition pending the Commission’s administrative proceedings. A bipartisan group of nine attorneys general is joining the FTC’s federal court complaint.

Kroger operates thousands of stores across 36 states, which includes regional banners such as Fred Meyer, Fry’s, Harris Teeter, King Soopers, Kroger, and Quality Food Centers. Albertsons also operates thousands of stores across 35 states under regional names including Albertsons, Haggen, Jewel-Osco, Pavilions, Safeway, and Vons. If the merger were completed, Kroger and Albertsons would operate more than 5,000 stores and approximately 4,000 retail pharmacies and would employ nearly 700,000 employees across 48 states.

Executives for both Kroger and Albertsons have acknowledged that the two supermarkets are direct competitors, forcing each other to aggressively compete for customers by lowering prices and for employees by providing better pay and benefits across the country. Similarly, executives for both supermarket chains have conceded that Kroger’s acquisition of Albertsons is anticompetitive, with one executive reacting candidly to the proposed deal: “you are basically creating a monopoly in grocery with the merger.”

Inadequate Divestiture Offering

To try to secure antitrust approval of their merger, Kroger and Albertsons have proposed to divest several hundred stores and select other assets to C&S Wholesale Grocers, which operates just 23 supermarkets and a single retail pharmacy. The FTC’s administrative complaint alleges that Kroger and Albertsons’s inadequate divestiture proposal is a hodgepodge of unconnected stores, banners, brands, and other assets that Kroger’s antitrust lawyers have cobbled together and falls far short of mitigating the lost competition between Kroger and Albertsons.

The FTC says the proposed divestitures are not a standalone business, and C&S would face significant obstacles stitching together the various parts and pieces from Kroger and Albertsons into a functioning business—let alone a successful competitor against a combined Kroger and Albertsons. The proposal completely ignores many affected regional and local markets where Kroger and Albertsons compete today. In areas where there are divestitures, the proposal fails to include all of the assets, resources, and capabilities that C&S would need to replicate the competitive intensity that exists today between Kroger and Albertsons. Even if C&S were to survive as an operator, Kroger and Albertsons’s proposed divestitures still do not solve the multitude of competitive issues created by the proposed acquisition, according to the complaint.

Harm to Consumers

In addition to raising grocery prices, the FTC alleges that Kroger’s acquisition of Albertsons would also diminish their incentive to compete on quality. Today, Kroger and Albertsons compete to improve their stores in many ways, including offering fresher produce, higher quality products, improved private label offerings, a broader array of in-store services, flexible store and pharmacy hours, and curbside pickup services.

The FTC charges that the deal would eliminate head-to-head price and quality competition, which have driven both supermarkets to lower their prices and improve their product and service offerings. If the merger takes place, grocery prices will increase, and Kroger and Albertsons’ incentive to improve product quality and customer service will decrease, further harming customers.

Harm to Workers

Kroger and Albertsons are the two largest employers of union grocery labor in the United States. They actively compete against one another for workers. The two companies also try to poach grocery workers from each other, especially in local markets where they overlap. Currently, most workers for both supermarket chains are members of the United Food and Commercial Workers union.

Today, UFCW and other unions leverage the fact that Kroger and Albertsons are separate and competing companies. Unions push for both supermarket chains to negotiate better employment terms for union grocery workers, especially when negotiating over collective bargaining agreements (CBAs).

A combined Kroger/Albertsons, however, would gain increased leverage over workers and their unions—to the detriment of workers, the FTC alleges. The combined Kroger and Albertsons would have more leverage to impose subpar terms on union grocery workers that slow improvements to wages, worsen benefits, and potentially degrade working conditions. In some regions, such as in Denver, the combined Kroger/Albertsons would be the only employer of union grocery labor. Union grocery workers ability to leverage the threat of a boycott or strike to negotiate better CBA terms would also be weakened.

The Commission vote to issue the administrative complaint and authorize staff to seek a temporary restraining order and preliminary injunction in federal district court was 3-0. The federal court complaint and request for preliminary relief will be filed jointly with the state attorneys general in the U.S. District Court for the District of Oregon.

A public version of the complaint will be available and linked to this news release as soon as possible.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of the administrative complaint marks the beginning of a proceeding in which the allegations will be tried in a formal hearing before an administrative law judge.

The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about how competition benefits consumers or file an antitrust complaint.  For the latest news and resources, follow the FTC on social mediasubscribe to press releases and read our blog.

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Arctic Glacier Adds to Senior Leadership Team

Arctic Glacier, North America’s leading manufacturer and distributor of premium ice products and services, announces the appointment of three new senior leadership team members including CFO, CIO and the newly created role of general counsel. The ice industry is primed for significant growth given robust economic indicators and shifting consumer behaviors, and Arctic Glacier is leading the way as a key-market player. With a growth-minded, performance-based culture that is setting the pace for future growth within the ice industry, and Arctic Glacier is the fastest-growing brand and only one seeing year-over-year increases.

The newly appointed Senior Leadership Team members are:

General Counsel Travis Bonnell

Bonnell offers extensive, international industrial experience providing real practical solutions to business, finance, and legal challenges to executive leadership in highly regulated and complex compliance environments. In the newly created role of general counsel, Bonnell will be the senior legal advisor to Arctic Glacier, acting as the in-house legal representative, Prior to joining Arctic Glacier, Bonnell previously held several executive leadership roles with Rehab Industries where he was responsible for the development and execution of the company’s organic and inorganic growth initiatives.

Chief Information Officer Doug Saunders

Saunders is an expert in leading business-critical, complex, high-profile global initiatives, programs, and multi-functional projects. He is focused on driving sound, strategic solutions in practical phased steps, achieving results within a contemporary budget-conscious and control-aware framework. Saunders will lead all IT functions while providing the vision, strategy, and tactics to transform and upgrade the company’s IT applications and the business processes impacted by those changes. Prior to joining Arctic Glacier, Saunders was chief information officer for Sweeping Corporation of America where he implemented SalesForce for 70+ locations in addition to managing security strategy, infrastructure services, and mergers & acquisitions.

Chief Financial Officer Stephanie Choudri

Choudri brings a wealth of knowledge and expertise as a senior-level finance executive. She most recently served as a partner with CFGI’s New York office where she provided accounting, consulting, and interim management services to clients in a variety of industries. She also held the roles of managing director and senior manager. Prior to working at CFGI, she was the chief financial officer at DuJour Media Group, LLC. Choudri is skilled at technical and operational accounting assistance in areas that include revenue recognition, share-based compensation, business combinations, debt modifications, and complex equity and financing arrangements. Choudri will be focused on implementing business controls and process improvements.

“With this enhanced and energetic Senior Leadership Team, I know we have the right people, with the right combination of skills in the right positions to make a big impact to realize our objectives”, said Chief Executive Officer Peter Laport. “I am confident with their sharp operational and financial focus, deep technical and industry expertise, and proven leadership capabilities, our new leaders are adding value to an already stellar team.”

Arctic Glacier’s new Senior Leadership Team’s depth of experience and wealth of knowledge will be pivotal in driving continued growth. These experienced business leaders will continue to support the organization’s world-class talent and commitment to its customers.

Arctic Glacier Premium Ice is the premier provider of high-quality, premium ice products serving North America. For over 140 years the company has perfected the art of ice making, best-in-class service, food safety and reliable logistics. Today Arctic Glacier produces and delivers over 2.5 billion pounds annually of premium ice products to supermarkets, mass merchants, c-stores, dollar stores, gas stations, and liquor stores, as well other commercial and industrial businesses. Arctic Glacier services over 75,000 customers from production facilities, warehouses and distribution centers across the United States and Canada.

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Dairy Margin Coverage Enrollment to Begin

Dairy producers will be able to enroll for 2024 Dairy Margin Coverage, an important safety net program offered through the U.S. Department of Agriculture that provides producers with price support to help offset milk and feed price differences. This year’s DMC signup begins Feb. 28 and ends April 29. For those who sign up for 2024 DMC coverage, payments may begin as soon as March 4 for any payments that triggered in January.

USDA’s Farm Service Agency has revised the regulations for DMC to allow eligible dairy operations to make a one-time adjustment to established production history. This adjustment will be accomplished by combining previously established supplemental production history with DMC production history for those dairy operations that participated in Supplemental Dairy Margin Coverage during a prior coverage year. DMC has also been authorized through calendar year 2024. Congress passed a 2018 Farm Bill extension requiring these regulatory changes to the program.

“FSA is announcing the sign up for 2024 Dairy Margin Coverage. We encourage producers to enroll in this important safety net program. In reviewing 2023 margins and the more than $1.2 billion in Dairy Margin Coverage payments issued to producers, Dairy Margin Coverage is proven to be a program to reduce risk for our dairy producers,” said FSA Administrator Zach Ducheneaux. “If 2023 taught us anything, it’s that we honestly have no idea what will happen in the market in any given year. Producers who took advantage of this affordable risk management tool for the 2023 program year, were able to mitigate some financial impacts on their operations. At $0.15 per hundredweight for $9.50 coverage, risk protection through Dairy Margin Coverage is a relatively inexpensive investment in a true sense of security and peace of mind.”

DMC is a voluntary risk management program that offers protection to dairy producers when the difference between the all-milk price and the average feed price (the margin) falls below a certain dollar amount selected by the producer.  In 2023, Dairy Margin Coverage payments triggered in 11 months including two months, June and July, where the margin fell below the catastrophic level of $4 per hundredweight, a first for Dairy Margin Coverage or its predecessor Margin Protection Program.

2024 DMC Coverage and Premium Fees

FSA has revised DMC regulations to extend coverage for calendar year 2024, which is retroactive to Jan. 1, 2024, and to provide an adjustment to the production history for dairy operations with less than 5 million pounds of production. In previous years, smaller dairy operations could establish a supplemental production history and receive Supplemental Dairy Margin Coverage. For 2024, dairy producers can establish one adjusted base production history through DMC for each participating dairy operation to better reflect the operation’s current production.

For 2024 DMC enrollment, dairy operations that established supplemental production history through Supplemental Dairy Margin Coverage for coverage years 2021 through 2023, will combine the supplemental production history with established production history for one adjusted base production history.

For dairy operations enrolled in 2023 DMC under a multi-year lock-in contract, lock-in eligibility will be extended until Dec. 31, 2024. In addition, dairy operations enrolled in multi-year lock-in contracts are eligible for the discounted DMC premium rate during the 2024 coverage year. To confirm 2024 DMC lock-in coverage or opt out in favor of an annual contract for 2024, dairy operations having lock-in contracts must enroll during the 2024 DMC enrollment period.

DMC offers different levels of coverage, even an option that is free to producers, minus a $100 administrative fee. The administrative fee is waived for dairy producers who are considered limited resource, beginning, socially disadvantaged or a military veteran. To determine the appropriate level of DMC coverage for a specific dairy operation, producers can use the online dairy decision tool.

DMC Payments

DMC payments are calculated using updated feed and premium hay costs, making the program more reflective of actual dairy producer expenses.  These updated feed calculations use 100 percent premium alfalfa hay.

More Information

USDA also offers other risk management tools for dairy producers, including the Dairy Revenue Protection plan that protects against a decline in milk revenue (yield and price) and the Livestock Gross Margin plan, which provides protection against the loss of the market value of milk minus the feed costs. Both DRP and LGM livestock insurance policies are offered through the Risk Management Agency. Producers should contact their local crop insurance agent for more information.

For more information on DMC, visit the DMC webpage or contact a local USDA Service Center.

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