Grocery prices remain high, and there’s a question raised by Kroger’s proposed acquisition of Giant Eagle: Why would the government allow this merger after it blocked Kroger’s attempt to buy Albertsons?
But the answer isn’t just that Giant Eagle is smaller.
Kroger and Albertsons competed in many local grocery markets. Their solution was to move 579 stores and supporting assets to a much smaller operator—an ambitious bid to recreate the competitor they were eliminating.
Kroger and Giant Eagle are largely in different parts of the country. Columbus appears to be the major exception. “The concentration numbers there are serious, but a limited number of local overlaps may be easier to address with targeted store divestitures.”
In this episode we explain the following:
why grocery competition is local.
how HHI measures concentration of a market
why Columbus gives rise to the structural presumption
why you don’t always need to block a whole deal for a competitive problem
the difference between a targeted remedy and rebuilding a major competitor
why merger enforcement cannot just be about “big is bad”
The bigger lesson: merger law looks at the loss of competition for customers and whether that competition can be realistically maintained.
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