Mayor Johnson Opposes Jewel-Osco/Mariano's Merger As Federal Lawsuit Looms To Block It (2024)

CHICAGO — The Johnson administration has come out against the merger of two of the city’s largest grocers as the plan faces steep federal legal challenges.

Grocery powerhouses Albertsons, which owns Jewel-Osco, and Kroger, which owns Mariano’s, had hoped to complete a nationwide merger by early this year, but the Federal Trade Commission has slowed the roll with a lawsuit — saying the nearly $25 billion deal will kill competition and raise grocery prices for millions of Americans.

Illinois Attorney General Kwame Raoul, seven of his counterparts in other states and the District of Columbia joined the lawsuit.

“The proposed merger between Albertsons and Kroger would greatly reduce competition in the grocery market while leading to fewer choices for consumers and increased grocery prices at a time many families are struggling to keep up,” Raoul said in a statement. “Corporate profits and shareholder payouts should not come at the expense of consumers.”

Johnson is now echoing calls to stop the deal.

“The Johnson administration is against any merger that could have apotentially negativeimpact on the existing grocery stores in Chicago,” a mayoral spokesperson said in a statement. “All Chicago communitiesdeserve thriving food ecosystems with multiple food access points that provide nourishingand culturally resonant food.”

But an Albertsons spokesperson said in a statement the merger is needed for neighborhood grocery stores to compete with “mega retailers” like Amazon, Walmart and Costco, allowing the umbrella company to scale in ways that would keep prices lower.

It remains unclear how exactly the merger would impact local Chicago grocery stores, but 14 local Kroger stores — including the Mariano’s brand name — would be sold to a third-party grocer to “alleviate antitrust concerns,” according to the Albertsons spokesperson.

The buyer, C&S Wholesale Grocers, has committed to not closing any of the 14 stores, according to the Albertsons spokesperson. The list of Chicago stores changing hands is still subject to change, according to the spokesperson.

Overall, no stores will close as a result of the merger, Kroger CEO Rodney McMullen told senators in a November 2022 testimony. The Albertsons spokesperson reiterated that promise in his statement Monday.

“Albertsons Cos. merging with Kroger will expand competition, lower prices, increase associate wages, protect union jobs, and enhance customers’ shopping experience,” the Albertsons spokesperson said in the statement. “We are disappointed that the FTC continues to use the same outdated view of the U.S. grocery industry it used 20 years ago, and we look forward to presenting our arguments in Court.”

Local 881 United Food and Commercial Workers Union, which represents employees at Mariano’s and Jewel-Osco and has been a vocal opponent of the merger, did not immediately return Block Club’s request for comment.

The merger would limit competition for grocery workers, diluting wages, benefits and working conditions, according to the federal lawsuit.

Kroger and Albertsons— the nation’s two largest “traditional supermarket chains” and employers of unionized grocery workers — have consolidated grocery stores nationwide over the past four decades while generating billions in yearly revenue, according to the federal lawsuit.

“The proposed acquisition is by far the largest supermarket merger in U.S. history,” according to the lawsuit. “The stakes for Americans are exceptionally high.”

Plans to shed stores to a much smaller company, C&S Wholesale Grocers, would “fail to mitigate the substantial harm to consumers and workers from lost competition between Kroger and Albertsons,” according to the lawsuit.

Spokespeople for Kroger did not immediately return requests for comment. But the company previously said in a statement it will reinvest $500 million to “reduce prices for customers” and $1 billion to raise employee wages and benefits.

The federal lawsuit sent Albertsons’ stock price falling while stocks for Kroger, the larger company, remained largely stable. There are 37 Jewel-Osco locations and 13 Mariano’s locations across Chicago.

The merger deal was announced at a time of soaring food costs, which have remained stubbornly high despite inflation beginning to calm, according to the Washington Post.

Chicago continues to struggle with food deserts — some areas on the South and West sides left without easy access to fresh and healthy food — as grocery stores close or budget suppliers come in with what community members have called lackluster service.

Johnson has launched a fund to support local food entrepreneurs, created an incubator program for the creation of non-traditional food businesses, hopes to cut red tape for community growers and is floating an idea for a city-owned grocery store, the mayoral spokesperson said.

A study on the “feasibility” of the city-owned grocery store is underway, the spokesperson said.

“Taking a holistic approach alleviates the reliance on one single business, thus making it possible for a variety of models to coexist and coordinate,” the spokesperson said.

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