FTC okays Safeway-Albertsons merger

The U.S. Federal Trade Commission has cleared the merger of supermarket operators Safeway Inc. and Albertsons, creating a larger competitor to rival chain Kroger. But there is one caveat.

The FTC agreed to the deal only after Safeway and Albertsons agreed to sell 168 stores to address the FTC’s competition concerns.

The FTC said that without the store sales the merger would have lessened competition in 130 local markets in Arizona, California, Montana, Nevada, Oregon, Texas, Washington and Wyoming.The supermarket operators had argued that combining their distribution and purchasing efforts would produce cost savings that could be directed toward store improvements and lower prices.

Edith Ramirez, chairwoman of the FTC, said: "Absent a remedy, this acquisition would likely lead to higher prices and lower quality for supermarket shoppers in 130 communities. This settlement will ensure that consumers in those communities continue to benefit from competition among their local supermarkets."

The merger, announced in March, was valued at about $9.4 billion. Safeway and Albertsons announced the store-divestiture plan last month.The deal would create a larger competitor to Kroger Co., the biggest U.S. grocery store chain.

In December, Albertsons CEO Bob Miller said: “This transaction offers us the opportunity to better serve customers by adapting more quickly to evolving shopping preferences in diverse regions across the country. It also brings together two great organizations with talented management teams. (Safeway CEO) Robert Edwards and his team have done an outstanding job in positioning Safeway’s core business for success, by investing in its stores and creating innovative strategic marketing programs that contribute to shareholder value. Working together will enable us to create cost savings that translate into price reductions for our customers. Together, we will be able to respond to local needs more quickly and deliver outstanding products at the lowest possible price, more efficiently than ever before.”